New York’s insurance chief has issued a warning concerning insurance companies and Hurricane Irene. According to Benjamin Lawsky, Superintendent of Financial Services, some insurers are trying to avoid paying for damages caused by flooding spurred by the storm. Lawksy’s warning is not targeted at consumers but at the companies that are offering flood insurance. He says that no company should consider denying payments because the damage to homes and businesses are so clearly the result of flooding.
Some insurance companies are seeking to enforce what they call “hurricane damage” deductibles. This move is spurred by the fact that Hurricane Irene was not actually a hurricane by the time it reached New York. If such deductibles were enforced, home and business owners may be liable to pay excessive amounts of money to offset the additional work insurers would have to do to account for claims.
Despite Lawsky’s efforts to designate all storm-related damage as being coverable by flood insurance policies, the fact remains that the majority of New Yorkers do not have such coverage. According to the Insurance Information Institute, less than 20% of Americans have flood insurance. FEMA adds that the majority of the residents of upstate New York, which has been inundated with floods since the storm, have no such coverage. Without an insurance policy to fall back on, these people will have to bear the financial burden of recovering in the wake of Hurricane Irene.
