By Michael Souza
PBN Staff Writer

While storms such as 2011’s Tropical Storm Irene and the April-May 2010 flooding are memories, albeit painful still for some, such climactic weather events are becoming more frequent. Because of the damage they can cause property, a new state law was designed to provide additional protection to homeowners who have hurricane insurance.

Approved in June 2012, the bill also includes additional consumer protections for the processing of insurance claims for hurricane damage. The new law will take effect in January and will apply to policies issued or renewed on or after that date.

In the past, General Assembly members have said that in the wake of Hurricane Katrina in 2005, the reinsurance market – where insurance companies go to buy coverage to protect against excess losses – disappeared, causing insurers that provided homeowner insurance in Rhode Island to leave, especially in coastal areas.

Legislators have said that many homeowner policies were canceled and other insurance companies changed from a dollar-based to a percentage-based deductible for storm damage. That action left homeowners facing exorbitant costs for any damage from future storms.

In addition, some homeowner policies were not renewed; other insurance companies changed their traditional dollar-based deductibles for storm damage to a percentage-based deductible based on the value of the property, leaving homeowners facing the potential for enormous costs for any damage from future, serious storms.

In some cases the percentage was 3 percent; for a $500,000 house on the coast, that could result in a deductable of $15,000.

Rep. Brian Patrick Kennedy, D-Hopkinton, who helped co-sponsor the new rules, said the changes were made to help homeowners. “What ended up happening is that a lot of people complained to the R.I. Division of Business Regulations. They had suffered losses and in many cases, while some companies grumbled when it came time to pay the loss, and when it came time to renew the policy, insurance premiums increased proportionately,” he said.