In Sandy-ravaged New York, lawmakers introduced legislation to cap percentage-based hurricane deductibles at $1,500.

'Paying more and getting less'

Insurers say that percentage-based deductibles benefit everyone. Without them, home insurance rates would rise in hurricane- and tornado-prone areas and, if insurers couldn't raise rates enough to make a profit, they would have to exit some states altogether.

But consumer advocates aren't convinced. "Rates are going up even with the deductible," says Amy Bach, of the non-profit United Policyholders group, which represents consumers.

And in Texas, where State Farm, the nation's largest home insurer, has mandated percentage-based deductibles, premiums have soared in recent years, says Winslow. "Homeowners are paying more and getting less."

Property insurance rates rose 5 percent in May 2013, according to MarketScout, the industry's largest insurance exchange. And, while property losses totaled $65 billion last year, that figure is still a 44 percent improvement over 2011, says Willis's Finnis. More importantly, policyholder surplus (the money with which the industry pays claims) grew $20 billion from 2011 to 2012.

"The industry is well capitalized to absorb losses," says Finnis.

Do you have a percentage-based home insurance deductible?

  • Reread your policy to see if it contains a hurricane or windstorm deductible. Insurers involved in Superstorm Sandy or worried about the next doomsday event might have snuck it in the deductibles section or put it there awhile ago at your renewal time without you even knowing.
  • Compare this year's and last year's policy to see if the percentage deductible went up. A 1 or 2 percent windstorm deductible could now be 5 percent.
  • Determine what "triggers" your deductible, such as wind speed, and if so, for what length of time the wind has to blow at that speed.
  • Find out if your insurer lets you choose the type of deductible in your policy, either a percentage-based deductible or a capped dollar deductible, which often costs more but may be a better choice if you live in a storm zone.
  • See if the insurance company offers any alternatives to the percentage-based deductible. New Jersey Manufacturers, for example, is willing to forgo it if the policyholder "hardens his home" with hurricane straps on the roof rafters, venting, laminated glazing on the windows and improved garage doors.

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