The Massachusetts Division of Insurance rejected a request from a leading insurance provider to enforce a homeowners insurance deductible on homes damaged by last winter’s storms. Mapfre USA Corporation, the largest commercial home insurer in the state, requested that customers pay an additional homeowners insurance deductible of up to $10,000 for homes damaged by ice dams. The decision marks a rare occasion for the state’s regulators to reject a proposal from insurers to raise rates or pass on costs to customers.
Homeowners Insurance Deductibles and Ice Dams
The severe winter weather across the Boston area cost Mapfre nearly $1 billion in claims. Mapfre proposed the additional homeowners insurance deductible as a means to offset those costs. The company insures more than 200,000 homes across the state, with thousands of those home suffering from ice dam problems. Ice dams form when snow melts and refreezes. The re-frozen now then clogs drains and gutters, which forces moisture into the interior walls and causes severe water damage.
Details of the Homeowners Insurance Deductible Request
The deductible payment is the amount specified on the policy that a homeowner must pay out of pocket before the insurance policy will cover any costs. Mapfre requested the increased ice-dam homeowners insurance deductible as an addition to the standard deductible. The company also proposed a reduction of $100 to a customer’s annual premium if they agreed to the $10,000 ice-dam deductible. If the policy holders did not pay the additional homeowners insurance deductible, they would likely not be covered for ice-dam damage.
Separate Homeowners Insurance Deductibles Have Precedents
While the idea of a separate homeowners insurance deductible for ice dams may appear out of the ordinary, the practice does have its share of precedents. Robert Hartwig, president of the Insurance Information Institute, told reporters that carriers will often include a separate homeowners insurance deductible fro damages related to wind, hail, or heavy precipitation. In 1992, in the aftermath of Hurricane Andrew, many insurers in hurricane-prone areas added a separate deductible specifically for hurricane damage.
Homeowners Insurance Deductible Proposal May Return
Although the state’s insurance regulators rejected the latest proposal for an additional homeowners insurance deductible, the request may arise again if the state suffers from another severe winter. Mr. Hartwig told reporters that proposals for an ice-dam-specific homeowners insurance deductible “may be revisited” if the area experiences “another severe winter or two.”
Source: Boston Globe
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