Blumenthal Calls on State Farm to Drop Hurricane Deductible for Irene Victims

(Hartford, CT) – Senator Richard Blumenthal today called on State Farm Insurance to drop their hurricane deductible for victims whose homes were damaged by Tropical Storm Irene. Blumenthal was joined at the press conference by Elizabeth Wachsler, a resident from Bridgeport who sustained extensive damage to the lower level of her house. State Farm has only agreed to cover the damage if she first pays approximately $10,000 in a hurricane deductible. 

In a letter to Edward Rush, Chairman and CEO of State Farm Insurance, Blumenthal wrote, “Your company has decided -- despite requests from me, insureds, and the Connecticut Insurance Commissioner -- to keep the hurricane deductible in place even though the storm was downgraded to a tropical storm before reaching Connecticut…Particularly in these difficult economic times, this is a significant sum of money who is trying to rebuild in the wake of a devastating storm.”

After Tropical Storm Irene, sixty-four insurance companies decided to either waive the hurricane deductible or did not apply it because Irene was downgraded to a tropical storm. State Farm is the largest insurance company not to waive the deductible and continues to apply the charge to claims it received because the storm was downgraded less than twenty-four hours before causing damage in Connecticut.

The full text of the letter is below.

October 11, 2011

Edward B. Rust, Jr.
Chairman/CEO
State Farm Insurance
One State Farm Plaza
Bloomington, IL 61710

 

Dear Mr. Rust: 

As you know, Tropical Storm Irene caused significant damage to houses, personal property, and businesses throughout Connecticut. Many people lost homes that were in their families for generations. Cleaning up after Irene and repairing the damage is emotionally devastating and financially draining. In response to this concern, sixty-four insurance companies decided to either waive the hurricane deductible on their property casualty policy or to not apply the higher level of deductible because the storm did not qualify as a hurricane. This unprecedented, wide-spread industry action was commendable, demonstrating a commitment to the people of Connecticut.

Regrettably, State Farm was not one of those companies.  Your company has decided -- despite requests from me, insureds and the Connecticut Insurance Commissioner --  to keep the hurricane deductible in place even though the storm was downgraded to a tropical storm before reaching Connecticut. One individual who recently contacted my office would be forced to pay over $5,000 out-of-pocket as a result of State Farm’s decision. Particularly in these difficult economic times, this is a significant sum of money who is trying to rebuild in the wake of a devastating storm.

I understand that the insurance policies State Farm wrote for Connecticut residents permit the company to charge a full hurricane deductible, as Irene was downgraded to tropical storm status before the 24 hours that your policies require.  However, I urge you to reconsider this narrow interpretation of your policy documents.  The total amount that State Farm would have to waive in deductibles would be negligible, and would represent a significant benefit to your policyholders. 

I ask that State Farm reconsider its decision and follow the dozens of other insurance companies in Connecticut that have acted responsibly in the aftermath of Irene by waiving the hurricane deductible.

Sincerely,

Richard Blumenthal
United State Senate

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