Posted on 12 Oct 2011
U.S. Sen. Richard Blumenthal is asking State Farm to waive higher deductibles that homeowners pay out of pocket to cover damage from Tropical Storm Irene, but the insurer isn't budging.
"Sixty-four insurance companies decided to either waive the hurricane deductible on their property casualty policy or to not apply the higher level of deductible because the storm did not qualify as a hurricane. … Regrettably, State Farm was not one of those companies," Blumenthal wrote in a letter to State Farm CEO Edward B. Rust Jr.
State Farm Mutual Automobile Insurance Co. is the largest insurer of Connecticut homes that has not waived the higher, so-called hurricane deductible. Others, such as Travelers, Liberty Mutual and The Hartford, have either waived the higher out-of-pocket fees for homeowners or their policies didn't consider Irene a hurricane to begin with.
On Tuesday, after Blumenthal publicly called on State Farm to change its stance, the Bloomington, Ill., company responded sharply.
"We believe our decision is really grounded in fairness to all policyholders. To ignore deductibles this one time for this one event, wouldn't be fair to customers everywhere who have dealt with disasters in the past and have paid deductibles," said David Beigie, a State Farm spokesman.
"If you talk to the average person in Joplin, [Mo.] or any other location that's been hit by a disaster, those folks have played by the rules, and, if I were them or anybody, I'd be wondering, 'What's so special about this one instance now? Why does a particular set of people get different treatment?'"
Beigie referred to the deadly tornado that ravaged Joplin in May.
One State Farm policyholder required to pay a hurricane deductible is Elizabeth J. Wachsler, 46, of Beachview Avenue in Bridgeport. Her waterfront ranch sits on an estuary that flooded as the Long Island Sound swelled with a storm surge at high tide, pouring water into her finished basement. To recoup some of the expenses from flood damage, Wachsler filed a claim under her National Flood Insurance Program policy, which is administered by the Federal Emergency Management Agency.
Irene also knocked down a tree that crashed onto Wachsler's roof, doing "tens of thousands of dollars" in damage for which she filed a claim with State Farm, she said.
Wachsler said her standard deductible is $1,000, but the hurricane deductible is up to 5 percent of the insured value of her home. She declined to give her home's current value, which she bought in July 2005 for $399,000, according to the Bridgeport assessor's office records. Even at the purchase price, 5 percent would be $19,950.
"The people who were victims of this storm have a tremendous amount on their plates," Wachsler said.
Wachsler is single and owns the home herself. She said she works sporadically as a marketing consultant and that she doesn't have the thousands of dollars to cover the higher deductible. Her home is being repaired.
State Farm said it has had 1,559 claims filed so far in Connecticut related to Irene and the vast majority are for damage to homes. Among those claims, 674 had no hurricane deductible and 341 had policies in which the higher deductible didn't apply. State Farm has individually inspected 365 homes, of which 255 properties so far are required to pay the hurricane deductible.