DFS Proposes Hurricane Deductible Trigger Regulation
The New York State Department of Financial Services (DFS) has formally proposed an amended regulation on hurricane deductible triggers. The department is accepting comments from the public until July 7th.
The regulation will implement a law enacted last year. That law, which Big I New York supported, requires the department to “by regulation establish standards for hurricane windstorm deductibles, which create, to the greatest extent possible, uniformity in the operation of such deductibles with respect to the triggering event.” The law was intended to respond to concerns that homeowners in the same town or village might face vastly different hurricane deductibles because of the difference in policy conditions regarding what triggers them.
The DFS proposal will make these requirements:
- Carriers will have to provide insureds notices about hurricane deductibles at policy issuance and renewal. The notices will be subject to DFS approval. The proposed text provides standards for the notices to meet. Carriers will be able to combine this notice with the mandatory flood insurance notice if they wish.
- Carriers will have to demonstrate to DFS that there is sufficient exposure to hurricane risk in that geographic area before a policy could contain a hurricane deductible.
- The deductible may be triggered only when the National Weather Service (NWS) has determined that a hurricane made landfall (“the intersection of the surface center of a tropical cyclone with a coastline”) in New York.
- The deductible will apply to direct damage caused by winds from twelve hours before landfall until twelve hours after NWS cancels the last hurricane warning or watch for New York for a specific hurricane.
- Carriers will be able to vary deductibles by county, a property’s proximity to the coastline (“distance measured from mean high water”), or both.
- Carriers will have to aggregate all covered losses (dwelling, other structures, and personal property) when determining whether the loss exceeds the hurricane deductible.
- If multiple deductibles apply, the carrier will be able to apply only one, and that can be the highest one.
- Carriers will not be permitted to apply hurricane deductible to loss of use coverage.
- The requirements will take effect 180 days after the department formally adopts them and will apply to homeowners and dwelling policies issued or renewed on or after that date. For example, if the department publishes the notice of adoption in the July 16, 2025 issue of New York State Register, the requirements will apply to policies issued or renewed on and after January 12, 2026.
Big I New York intends to submit comments to the department before the July 7th deadline. Anyone else wishing to do so should send them to joana.lucashuk@dfs.ny.gov by that date.
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