New Rhode Island Law Saves Residents Money When Storms Loom

A new law could save homeowners money when a hurricane off the Atlantic coast churns up weather strong enough to damage homes in Rhode Island but never reaches the state.

Legislation signed last week by Gov. Don Carcieri prevents insurance companies from forcing customers to pay a higher deductible than normal for hurricane-related damage unless hurricane-force winds actually gust over Rhode Island.

The bill easily passed the Democratic-dominated General Assembly and was supported by Carcieri, a Republican, who believes it will protect consumers, said his spokeswoman, Amy Kempe.

Until the law was changed, insurers could apply those higher deductibles anytime a hurricane warning was declared, even when storms were as far away as the North Carolina coast and the roughest weather stayed clear of Rhode Island.

Bill Sponsor Rep. Brian Kennedy, D-Hopkinton, said he and other lawmakers learned this year of the loophole but was unaware how many people had been affected.

The last hurricane to strike Rhode Island was Hurricane Bob in 1991, which was blamed for 18 deaths in New England and produced peak winds of 125 miles per hour over Cape Cod in neighboring Massachusetts.

“Just about everybody in the state has some kind of deductible dealing with hurricanes, whether you’re on the coast or inland,” Kennedy said. “We can have a nor’easter than can cause more damage than a hurricane.”

Most insurance policies force homeowners to pay a cash deductible before their insurer will cover damage under normal circumstances. But given this small state’s proximity to the coast, many homeowners in Rhode Island can also be forced to pay up to 5 percent of the total property damage caused by a hurricane before an insurer will cover their remaining bills.

Under the new law, insurers cannot require their customers to pay a hurricane deductible unless the National Weather Service records winds of at least 74 miles per hour in Rhode Island. Lynn Knauf, the director of personal insurance lines at the Property Casualty Insurers Association of America, said she was unaware of any other state that has enacted similar restrictions.

The bill faced opposition from the insurance industry, although the law’s impact will probably be minor, said Robert Suglia, senior vice president and general counsel for the Amica Mutual Insurance Co. in Lincoln, which insures roughly 35,000 homeowners in the state.

He defended the larger use of hurricane deductibles, saying they allow his company to lower its financial risk to a big storm and offer home insurance to more customers than would otherwise be possible.