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Homeowner victims of Hurricane Harvey and Hurricane Irma face thousands of dollars of extra insurance costs because the storms are expected to trigger a little-known deductible that shifts a big share of recovery expenses to consumers.
“Families will have to dig deeper into their pockets because few have federal flood insurance, and insurers have been steadily increasing hurricane wind-coverage deductibles and imposing other homeowners insurance policy limitations,” Robert Hunter, director of insurance for the Consumer Federation of America (CFA), said on the group’s website. “This shift of costs to consumers under homeowners insurance policies may take some by surprise, since disclosures are often buried in renewal paperwork that consumers may not understand or even read.”
CFA estimated that Harvey could cause about $2 billion in wind damage, prompting as many as 50,000 homeowner insurance claims.
Deductibles range from 1 to 5 percent of the insured value of the home, Fox Business reported. A home insured for $200,000 with a 5 percent deductible would leave the owner responsible for the first $10,000 of repair costs before insurance coverage kicks in.
Defenders of hurricane deductibles say they encourage insurers to provide coverage in high-risk areas and prompt homeowners to take steps to prevent damage, the Wall Street Journal reported. But some consumer advocates say the provisions are obscure, confusing and seem designed to limit insurance claims.