Hurricane Sandy Means Higher Homeowners Insurance Premiums

It wasn’t even a hurricane when it came ashore, but Tropical Storm Sandy partnered with a cold front and a full moon to wreak havoc in October on portions of the northeast United States. Homeowners insurance companies were hit by the storm, too, and that could be bad news for homeowners far inland. http://www.premierhomeownersinsurance.com/

Insurers don’t usually raise homeowners insurance premiums across the board after a single catastrophic event. However, Sandy’s winds and storm-surge flooding caused an estimated $10-20 billion in damage. While insurers’ reserves are sufficient to cover initial payouts, the companies still could pass along the pain through higher insurance or reinsurance billings.

One reason homeowners insurance premiums might go up is because Hurricane Sandy lost velocity as it approached landfall. Pegged to the velocity of its winds as the main brunt of the storm crashed ashore in Maryland, New Jersey, and New York, http://www.premierhomeownersinsurance.com/new-york/home-insurance, Sandy was officially downgraded to a tropical storm. Because the winds were less than hurricane force, the insurers couldn’t trigger “hurricane deductible” stipulations.

The higher deductible in policies allows insurers to pay thousands of dollars less in claims for each policy because the homeowners must pay more. The differential worked in favor of the property owners in the storm-battered Northeast states, but could result in higher homeowners insurance premiums for policyholders elsewhere in the country. State Farm Insurance Company, for example, received nearly 25,000 claims within a couple of days, each one more expensive to cover than if Sandy had been deemed a hurricane.

Another hit on insurers by Hurricane Sandy—or Tropical Storm Sandy, call it what you will—is a result of the surging water driven ashore when the moon lifted the tide high and Sandy drove it ashore. Many of the houses inundated in coastal counties weren’t covered by flood insurance because they don’t have a mortgage. Others unprotected by flood insurance were outside normal flood-prone areas but were flooded by Sandy anyway.

So even conscientious homeowners fell victim to the triumvirate of meteorological conditions—moon tide, cold front, and tropical storm—and conscientious insurers did as well. Higher homeowner insurance premiums may be the ultimate consequence of Hurricane Sandy if insurers ask for it and regulators agree. Learn more today, http://www.premierhomeownersinsurance.com/news

Contact Information

Laurin Agnew

Partner

Premier Homeowners Insurance

(1) 904-280-2589

laurin@moranfinancialsolutions.com