Five Questions With: Mark A. Male

"EVERYONE IN Rhode Island is exposed to potential flooding," says Mark Male. /

It has been nearly two decades since southern New England has been hit hard by a hurricane. With each passing year, the complacency grows. Visits by relatively weak storms like the recent Tropical Storm Hanna don’t help matters.
Now the Independent Insurance Agents of Rhode Island have launched a public awareness-campaign – including TV and radio ads and a Web site, www.coastalinsuranceri.com – to inform consumers about the perils of hurricanes. With Rhode Island in the midst of hurricane season, Mark Male, executive vice president of IIARI, answered five questions about storms and their relation to insurance.

PBN: Why did the Independent Insurance Agents of Rhode Island decide to launch the public-awareness campaign now?
MALE:
The independent insurance agents in Rhode Island are concerned about possible consumer confusion [over] hurricane deductibles. Most individuals and businesses maintain property insurance, so that’s not an issue. We are concerned about homeowners having a lack of knowledge, understanding and awareness of how hurricane deductibles work. A catastrophic hurricane event is neither the time to learn how your deductible works, nor is it a good time to find out you need considerable dollars to cover your obligation. The association’s goal is to be proactive in educating consumers.

PBN: Can you explain what the hurricane deductible is, why only certain people have it and how it is assessed?
MALE:
There are many variables impacting what deductible may apply on a homeowners policy. Some primary factors are your location and the company in which your insurance is placed. The most important thing to know is the deductible applies to wind damage from hurricanes. Depending on where you live, you may have no hurricane deductible at all, or you could see a deductible as high as 5 percent. Some perceive that the deductible is assessed against the claim. In reality, it is assessed against your homeowners-policy limit. For example, someone with a $200,000 insurance policy sustains hurricane damage of $15,000. A 2-percent deductible would be assessed to the policy limit of $200,000 or $4,000. That deductible is applied against your claim so the net recovery would be $11,000. Ultimately you should talk to your insurance agent to learn more about your specific deductible and what you can do to minimize the impact of a deductible.

PBN: A state law recently went into effect that limited the use of certain deductibles on a homeowners policy. Why and how did that law come about?
MALE:
The Insurance Division of the R.I. Department of Business Regulation recently adopted Insurance Regulation 110 in compliance with R.I. General Laws 27-5-3.7 that set forth the rules by which companies may use and apply hurricane deductibles. The regulation outlines definitions, permissible use and mitigation credits for homeowners. The law, effective July 1 of this year, applies to residential-property insurance policies. What prompted the law was the implementation of wind deductibles by insurance companies after they performed hurricane modeling. The legislature responded to this action by passing legislation that narrowed the use of the deductible for hurricanes only. Thanks to the legislature there are only hurricane deductibles and no longer named-storm deductibles on homeowners policies.

- Advertisement -

PBN: What is your group’s recommendation on flood insurance?
MALE:
Everyone in Rhode Island is exposed to potential flooding. With significant rainfall comes large amounts of surface water that can accumulate and cause flooding. We also see significant flooding in winter months when heavy rain follows accumulating snow. When water has nowhere to go, flooding occurs. With less than 20 percent of Rhode Islanders carrying flood insurance, a great majority of the residents are exposed to uninsured losses. Unless a mortgage company requires the insurance, many people decline the coverage – a dangerous litmus test for need. Our philosophy is each Rhode Islander needs to evaluate their risk and exposure to flooding and then make an informed decision.

PBN: What is your group’s recommendation to business owners in terms of being insured for hurricanes, wind storms and other acts of nature?
MALE:
While most commercial insurance policies do not attach a hurricane deductible, many commercial properties located in coastal areas of Rhode Island do have wind deductibles. Commercial properties are excluded from the new law recently enacted, so in most cases the deductibles are for wind, which could include storms other than hurricanes such as a winter nor’easter. Businesses need to be keenly aware of what their exposure is to loss from high winds. Once they understand how they are exposed, they need to take steps to mitigate those exposures. When businesses can’t operate because of the devastation from storms, it creates a ripple effect. Idle employees, an inability to satisfy customers and deliver their goods or services do not serve business, employees or customers well.

No posts to display