New York has enacted a law to standardize definitions for hurricane windstorms in insurance policies, aimed at creating uniformity around deductibles and the determination of triggering events.
The law, signed on Nov. 22, will take effect in 90 days. Under the new legislation, the New York Department of Financial Services (DFS) superintendent is required to develop and issue regulations within 180 days of the law’s implementation.
Prior to the law’s enactment, varying definitions of windstorms in insurance policies could result in significant financial differences for policyholders. The Professional Insurance Agents of New York State (PIANY) highlighted that policyholders often faced higher hurricane windstorm deductibles, calculated as a percentage of a home’s replacement cost, compared to standard deductibles.
According to PIANY, over 100 different windstorm definitions were previously approved by the state insurance regulator.
In a report from AM Best, PIANY said the new law was among its top legislative priorities and would offer greater clarity for policyholders regarding their windstorm risks. The group stated that simplifying definitions would help consumers focus on comparing premiums and deductibles without the added complexity of varying terms.
It also said the law would enable agents, insurers, and local officials to better respond to hurricane-related events without needing to interpret differing policy definitions.
Not all stakeholders supported the legislation. Opponents argued that the law could reduce homeowners' ability to negotiate insurance terms, including adjusting deductibles to manage premium costs.
During debates, Republican Assemblyman Jake Blumencranz warned that adopting such standards could lead to reduced flexibility in the insurance market. He cited Florida as an example, stating that strict standards could make homes uninsurable for those unable to meet the requirements.
Blumencranz also argued that New York might face similar challenges, saying the law could accelerate such outcomes.
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