Okay, so Section 12 of HR 3370 deals with increasing the available deductible, the amount you pay for damages before the insurance would kick in. At present the maximum deductible is $5,000, the proposal would increase the maximum deductible to $10,000. The goal of this increase is to allow some people to choose lower rates, but at a higher risk to the property owner. The act does require notice to homeowners about their responsibilities should they choose the higher deductible.
I have a few concerns with this provision. The average annual flood insurance cost not to exceed 1% of total premium value discussed earlier is, most likely, going to be tied to some level of deductible. If a homeowner can only attain this by paying a higher deductible, there may be little true savings. Clearly this bears watching.
Another concern is that, with a high deductible, too many homeowners will find themselves over their heads when they need to file a claim. For instance, Dennis has 17 repetitive loss properties. The insurance payouts for these properties since 1978 is slightly over $500,000 all-time, or about $30,000 per property. Repetitive loss properties have had two or more losses of $1000 or more since 1978. So, given these parameters, the average claim is under $15,000 for even the properties most in harms way. Taking it a step further, since 1978 NFIP has paid out $1,450,308 over 233 claims, or about $6,200 per claim.
Large deductibles are not in the best interest of Dennis homeowners unless the annual payments are well below that 1% level.