§ 27-5-3.7 - Hurricane deductibles, triggers and policyholder notice. - Rhode Island Statutes

SECTION 27-5-3.7

   § 27-5-3.7  Hurricane deductibles, triggersand policyholder notice. – (a) The provisions of this section shall be applicable to policies issuing orrenewing on or after July 1, 2008.

   (b) In all instances where an insurance company licensed todo business in this state offers or includes any deductible and/or mitigationmeasure related to such deductible for any type of personal lines residentialproperty insurance on dwelling houses, the insurance company shall provideprominent and clear notice to insureds, that shall be included in the policyissuance or renewal package and shall fully disclose all details pertaining toany such deductible and/or mitigation measure.

   (c) The insurer may apply a deductible specific to windstormcoverage where:

   (1) The deductible is specifically approved by the directorand shall not exceed five percent (5%) of the insured value.

   (2) The deductible shall be applicable to losses due to ahurricane during the period commencing with the issuance of a hurricane warningbulletin for any part of the state by the National Hurricane Center andconcluding twenty-four (24) hours after the termination of the last hurricanewarning bulletin for any part of the state.

   (3) The deductible, whether it is a flat dollar deductible ora percentage deductible shall be presented by at least two (2) examples thatillustrate the application of the deductible to the insured. Nothing hereinshall prohibit the insurer from providing any additional information to theinsured to assist in the insured's understanding of the deductible to beapplied to the insured's policy.

   (4) The deductible set forth above shall not be applied toany insured, if the insured has installed approved mitigation measures toprotect against windstorm damage and the insurer has either inspected theproperty or the insured has submitted satisfactory proof of installation of theapproved mitigation measures. The insurance commissioner, in consultation withthe state building code commissioner, shall adopt and may amend or revise alist of mitigation measures, based so far as reasonably feasible on nationalstandards for such measures and practices in other comparable states. The listof mitigation measures adopted by the insurance commissioner shall beconsidered approved mitigation measures for purposes of this subdivision.

   (5) For the application of the hurricane deductible in BlockIsland, losses are due to a hurricane when a hurricane results in hurricaneforce sustained winds as reported by the national weather service for BlockIsland. For the application of the hurricane deductible in the remainder of thestate, losses are due to a hurricane when a hurricane results in hurricaneforce sustained winds as reported by the national weather service for any otherlocation in the state. All terms are as defined by the national weather service.

   (d) Premium credits shall be applied to policies withdeductibles as set forth in subsection 27-5-3.7(c).

   (e) An insurer may require mitigation measures to protectagainst windstorm damage only after specific approval of the substance of suchmitigation measures by the director;

   (2) Mitigation measures to be taken by an insured are clearlyexplained, including a complete illustration of the dollar impact upon thepremiums to be charged to insureds if the requested mitigation activities areundertaken;

   (3) No mandatory deductible for windstorm damage shall beincluded in the policy;

   (4) An insurer shall write the requested coverage at thepremium rate that includes the premium credit to be realized with thecompletion of the mitigation efforts;

   (5) The insurer shall affirmatively state the length of timeduring which discount given for the mitigation efforts will apply; and

   (6) No insurer shall subsequently non-renew an insured whohas taken the mitigation steps requested by the insurer for reasons of theinsurers exposure to catastrophe loss, unless for non-payment of premium,fraud, breach by the insured of a provision of the policy, reversal or a lackof maintenance of the mitigation steps, or insurer solvency concerns or adverseloss history.

   (f) Penalties for failure to comply with the provisions ofthis section shall be administered by the director in accordance with theprovisions of § 42-14-16.

   (g) The department of business regulation shall haveauthority to adopt such rules, including emergency rules, as may be necessaryor desirable to effectuate the purposes of this section.