Rhode Island Passes New Law to Protect Homeowners with Hurricane-Related Claims

Rhode Island Gov. Lincoln Chafee signed into law a new piece of legislation  designed to provide additional protection to homeowners whose properties suffer  damages from hurricanes.

The legislation (House bill 2012-H7484A and Senate bill 2012-S2597A)  also includes additional consumer protections for the processing of  insurance claims for hurricane damage.


The new law will take effect beginning January 2013. It will be  applicable to policies issued or renewed on or after January 1, 2013.

Following Hurricane Katrina in 2005, the state of Rhode Island suffered a mass exodus of insurance providers from the state, especially in coastal areas.

Lawmakers said many Rhode Island homeowner policies were not renewed and  other insurance companies changed the traditional dollar-based  deductibles for storm damage to a percentage-based deductible, leaving  homeowners facing the potential for enormous costs for any damage from  future, serious storms.

This new legislation has several components which aim to protect homeowners:

• Limits a hurricane deductible to only once per  hurricane season, so that a homeowner cannot be hit with a second  deductible in the unlikely event that a second hurricane hits the state  during a hurricane season.

• Provides a hurricane mediation process as a non-adversarial  and non-binding alternative dispute resolution process for claims  arising from a hurricane in which the property owner and the insurance  company will work to resolve potential claims.

• Allows the Department of Business Regulation to address the declaration of a catastrophe in  Rhode Island in which homeowners may not be able to receive notice from  insurers. This regulation would provide the necessary procedure for  reporting requirements for claims related to the emergency, provide a  grace period for payment of insurance premiums, and provide a temporary  postponement for cancellations and non-renewals for insurance polices.

• Limits de minimus surcharges against a homeowner’s policy. For example, because of the extended power outages  associated with Tropical Storm Irene, many Rhode Islanders suffered food  spoilage. But the General Assembly noted that when some people submitted claims for $400 in food losses, their insurance company hit  them with a $500 rate increase for reporting the loss that they were  entitled to.

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