Allstate 3% Tropical Cyclone Deductible
Allstate Insurance Company: “Dear Customer, We’re writing you to let you know about a change we’re making to the Allstate Insurance company property policy referred to above [our home]. At that policy’s upcoming renewal, it will add a mandatory Tropical Cyclone Deductible to your policy in an amount equal to 3% of your Dwelling Protection coverage limit.“ Italics are theirs, not mine.
Fred & Kim: “Let’s see, 3% times…. carry the… multiply by the fraction of … that’s um… that’s a $9,900 deductible! That can’t be what they mean… let’s call the agent.”
…So we called our agent and got his assistant (We’re in good hands, you know). I asked the two questions I could think of: ”What exactly qualifies as a Tropical Cyclone?“ and, “You’ve got to be kidding right? Isn’t the point of insurance not to outlay that much money in a disaster?”
The agent’s assistant said that Allstate defines a Tropical Cyclone as any storm named by the National Weather Service (Andrew, Isabel, Katrina, etc.) She also said that it would be unlikely for us to be hit with that type of storm in the Maryland area. (eh hem… if that’s the case, it begs the question why the deductible needs to be so high in the first place).
Anyhow, I can only assume she isn’t from here. Back in 2003, Hurricane Isabel came straight up the coast, boasting 80mph gusts when she got here. Since Maryland isn’t in hurricane alley, those winds knocked down countless shallow-rooted trees. In fact, our previous house had a tree fall on the roof during the storm. My insurance company at the time (Harleysville Mutual) paid more than $4000.00, and this without sending out an adjuster! And, since I removed the tree with the help of friends, they waived my deductible ($500.00)! Had I been with Allstate under this new policy, they would have paid a big fat zero… zilch… nada.
As for the answer to my second question… well… they weren’t kidding. To his credit, our agent promptly called me back and acknowledged that it was a lot of money. He said he’d call corporate and see if they could do anything about it. I noted that we have two properties insured with Allstate, and that there was no way we could stay with the company with the potential of a $17,000 bill if both were damaged in the same storm. Ultimately, corporate wouldn’t budge. Our agent referred me to a friend of his who is an insurance broker for a broad range of companies. That I liked. At least he’s being a good salesman (if you can’t get the commission, at least get the referall fee).
So we’re leaving Allstate (at least for homeowners). But I think there’s a bigger issue here:
Is Allstate Being Deceptive?
I can understand that Allstate needs to recover their losses and price their coverage to make a profit. But there’s a bigger issue here in the manner in which they’ve disclosed this increase: Allstate could have easily quoted the actual dollar figure for the deductible instead of citing it only as a % of the Dwelling Coverage limit. My guess is that many people will see 3% and will not realize the magnitude of the outlay they are committing to. Further, I think Allstate knows this, and that’s why they chose this way of presenting the increase. What’s worse is that people will be hit with this cost at a moment of weakness – likely when their house has been destroyed during a storm.
What do you think? Do you have Allstate? Does Allstate have a responsibility to more fully disclose this information, or am I overreacting?
Photo: There’s a House Under There… Somewhere by billums.
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14 Responses to Allstate 3% Tropical Cyclone Deductible
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April 21st, 2008 10:25 am
I have Allstate and the same type of thing happened when they dropped the Earthquake insurance. When I asked them what it cost to get this (now extra) coverage, they told me some ridiculous $$$ figure. My reply…so my house needs to be swallowed by the earth for it to be cost effective. Otherwise with this outrageous deductible, if all of my windows are shattered, I’m basically paying all of it myself. Their reply, “Well, in layman’s terms-yes!”.
They then proceeded to tell me that the chance of us having an earthquake is slim. Six months later, we feel the rumble of a 5.4, 120miles away. Doesn’t sound slim-does it.
April 21st, 2008 11:58 am
Wanna know what my hurricane deductible is? The one Allstate introduced in 2006 because that was the year we were supposed to have a severe hurricane on Long Island? Big breath….$35,000!!!!!!!!
Yes I’m still not dealing with it very well am I?
We can’t even change to State Farm because they aren’t insuring any properties within a 1000 feet on New York’s coastline, and they are canceling the policies of homeowners living within 450ft.
I’m thinking they need a new tagline:
“Insurance – if you can get it, you don’t need it”.
April 21st, 2008 12:07 pm
I agree with you – the implications of a 3% deductible should be made much clearer on the declarations page for customers. I have actually seen people burned by this during previous hurricanes.
We don’t have Allstate. MetLife actually lists the three possible deductible/premium scenarios on a page included with the policy declarations. It includes an IF, THEN like this: IF your premium is $4952 then your Hurricane Windstorm Deductible is $2500. If your premium is $4200 then your Hurricane Windstorm Deductible is 5% ($16,400).
So you see — they include the dollar amount you’ll be looking at right next to that percentage figure. Your selected premium/deductible is printed again in the same way on the declarations page. It seems to me that is exactly how it always should be done. Now.. if only they explained concurrent clause language on that declarations page….
And yes those are real numbers. We can’t afford the $4900 premium for the lower deductible.. So the best we can do is $4200/5% deductible. Eep.
April 21st, 2008 5:20 pm
Kristy– what you point out is a sales tactic that I generally find offensive: “We don’t guarantee that, but you don’t need to worry about it because it will never happen to you.” This is similar to an experience I had at a car dealer recently. The dealer said: “$1000 isn’t a lot of money when you’re buying a car.” I said back: “I’m glad you feel that way, because the $1000 is important to me, and you don’t have any problem giving it up!” (OK, I didn’t actually say that … but I thought it!
modernemama– I’m speechless. $35,000 is an amazing sum. How much did they want in order to buy-down the deductible? I’m going to be looking into Travelers — my friend has had a good experience with them. Also, the company I cited above – Harleysville Mutual – I would have stayed with them based on my own experience, but they didn’t offer an Umbrella Policy. Allstate did, but required we switch all our policies to them.
Anita–You’ve just given me another company to explore. I need to check the actual declarations on the allstate policy to see if they clearly call out the $ amount on the policy itself (because they didn’t on the letter I cited above).
In any event, the number you quoted is really high compared to Maryland rates. Our homeowners on a 2300 sq. ft. house is $1250. My friend pays much less than that on a larger house with Travelers. Is your house huge???
April 21st, 2008 11:19 pm
Well, we have no hurricane or tropical cyclone coverage here in Colorado…
But that is quite a bit underhanded of them!
April 22nd, 2008 7:37 pm
HOLY COW!!!! What a bunch of crooks!
April 26th, 2008 4:24 am
An acquaintance of mine worked in insurance. He told me that 97% or so of the money an insurance company collects from premiums is paid out in claims. (I’ve never verified that statistic.) Disasters like Hurricane Katrina take a significant toll. Still, we’re talking profits in the millions.
What bothers me is that something as straightforward sounding as “insurance” is so complicated–you have to read the fine print and read it again and again to determine what, exactly, it means, and what you can reasonably expect during a crisis or disaster. (Try getting hit by an uninsured drunk driver who totals your car and sends you to the hospital to see just how helpful your insurance is. I was in the hole after that one.)
April 26th, 2008 2:23 pm
LOL “Insurance: If you can get it – you don’t need it.” SO TRUE!!!
Fred – we’re suffering the Katrina backlash! Our house is approximately 4200 square feet under roof and our premium with ML was $2300 per year pre-Katrina. Then we got a check for around $20,000 (post-deductible) for about $150,000 damage & loss of contents…. And now our premium effectively doubled. Yay! And like the situation modernmama is describing along the NY coastline — insurance isn’t easy to get. We’re in no position to shop around considering the policy cancellations, lack of renewals, and insurers no longer writing policies here. We live 1/2 mile from the coastline, by the way.. The rates are triple what we’re paying for folks living closer to the water down here.
May 24th, 2008 1:23 am
Holy crap!! I know that post-Katrina, there was quite a time when virtually no one was writing new home owner policies anywhere in Delaware, even though we’ve never had anywhere close to a direct hit from a hurricane. Even USAA, who I’ve always used, said that they had just re-started writing policies here when we bought this house in June 2006.
Now I want to double-check our policy, to make sure that I didn’t miss something like that…
September 16th, 2008 4:53 pm
Too late for me. I used the same agent last year for windstorm policy, wrote her a check, deposited it under her door, because her office hours are the same time I am working. Paid them in the beginning of August. Got my policy on Sept 10th in the mail. Didnt look at it until the 12th (the day of Hurricane Ike). They gave me a 4% deductible. Last year I had a 1% deductible, didnt ask them to change it. Too coincidental for me. Now I have to pay the 3k out of pocket to fix my roof and fence. Stay away from Allstate. They are a scam. I am going to ask for my premium back (which I paid in full) and I am going somewhere else!!
September 16th, 2008 6:08 pm
Veronica – sorry to hear about this situation. I was upset that Allstate didn’t declare more obviously HOW MUCH people would have to pay. Good luck getting your repairs done.
September 28th, 2008 2:14 pm
I also have Allstate (unfortunately), and live 3 miles from where Hurricane Ike came ashore. We just found out that we have a $3,500 hurricane deductible or 2% of our home value. We are unsure as to whether we would have enough to make a claim worth while since it will most likely raise our premiums -AGAIN! We have lived here and been insured by Allstate for over 18 years and never had a claim but our premium has risen every year. My question is-what is your deductible for other perils? Ours is $1,700 or 1% of our home value for any other claim other than hurricane. This seems outrageous to me. Does anyone else have this high a deductible?
September 28th, 2008 5:50 pm
Mary,
Our deductible is $1000. 1% of home value seems very high, but I know in some places, this is becoming more commonplace.
October 27th, 2008 8:17 am
Veronica,
Same thing happened to me with Farmers. My deductible showed 1% for Troplical Cyclone on the renewal letter and it was changed 2 months later on a letter I did not notice / receive. The change was from $2,000 to 5%. They didn’t even care to do the math for you, that’s a $12,000 deductible.
It was corrected but you have to contact the Texas Insurance Board, my original 1% deductible is being honored, it wasn’t easy. Farmers response, “a programming error,” which translates into our business practices are unethical. Also, my insurance premiums have increased over 50% this year. Rediculous wouldn’t you say?