Wind Versus Water

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The Tampa Bay Times ran an excellent story, Hurricane Michael Destroyed Their Homes Then The Insurance Heartache Began, which tells a sad but familiar theme about insurance company denials and delayed payments following hurricane losses. I was quoted in the piece:

Chip Merlin, a Tampa insurance lawyer, said the same conflict happened in the last 15 years after Hurricane Katrina and Hurricane Ike. He said companies try to avoid making payment even when a slab is all that’s left of a property, as is the case in much of Mexico Beach.

‘Typically you have the strongest wind speeds come first, and then the storm surge follows it,’ Merlin said. Both cause damage. But residents and their attorneys, he said, may need to pay meteorologists and engineers to prove that flood and wind are to blame, and how much.…
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Hurricane Michael has left a familiar mark on the Florida Panhandle. Much like Hurricanes Katrina and Ike, Hurricane Michael brought devasting winds followed by wind and flooding and more wind. Battered homes and businesses are assessed in the aftermath in an attempt to determine the extent and cause of damage resulting from the multiple perils associated with a hurricane. This has proven to be no easy task after a major hurricane.…
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As I watched Hurricane Irma coverage on CNN, following the landfall in Naples, I was reminded of a problem many insureds faced following Superstorm Sandy: “Is the water the result of flood or rain?” While Naples was in the eye of the storm, CNN showed a six block stretch of water covering streets where rain water had collected; and this was before the storm surge hit.…
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Litigation related to Super Storm Sandy is still going strong; or even still getting into full swing. Recently, New Jersey Transit Corporation filed a lawsuit in New Jersey against numerous insurance carriers seeking $300 million in coverage from Super Storm Sandy damage. One of the issues in the case will involve whether a flood sublimit applies.

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Intelligent policyholders are not sticking around when their house is being destroyed documenting how much damage was caused by wind and then the flood that accompanies most of these catastrophic events. Yet, their insurance companies want to act as if their policyholders can play god. They demand that policyholder determine what damage was exactly caused by wind before the flood storm surge washed a lot of the evidence away.

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The National Flood Insurance Program (NFIP) is facing a September 30th deadline. That is the date the temporary extension runs out on the Flood Program. Unless a bill that reauthorizes the program passes, the NFIP could expire. But this week, the House of Representatives passed H.R. 1309 (The Flood Insurance Reform Act) by an overwhelming majority.

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The answer to the title question should be:

"Nobody should trust the government to conclusively determine anything."

The property insurance law news is that a Mississippi Senator has proposed federal legislation that would allow FEMA to determine the amount of wind damage versus flood damage an insured structure sustained when the issue arises. Anita Lee, of the Sun-Herald, reported on how this proposed system would work in Wicker Charts New Course for NFIP Changes:

The National Oceanographic and Atmospheric Administration would gather hurricane data from public and private sources. FEMA would use the data to apportion losses between wind and flood.

Elevation and construction materials for each property would be included in the assessment.

Any disputes that arose over a wind/water allocation would be resolved by a FEMA-appointed arbitration panel.

Lawsuits are prohibited. However, an insurance company and policyholder could, by agreement, opt out of an assessment.

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Another hurricane season is fast approaching, but, before the storms start brewing, one developer is looking to get a glimpse at what happens when the storms roll in. Darrell Jones has spent years developing a video-recording system that he hopes will withstand a hurricane and capture video images of a hurricane’s wrath. Jones’ goal is to preserve footage taken during the hurricane to help evaluate the most important question in hurricane property damage cases: was the damage caused by wind or flood?

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My past few hurricane blog posts have been discussions of the issues raised in the recent Florida state court case of Citizens Property Ins. Corp. v. Ashe, No. 1D09-1546, 2010 WL 4628915 (Fla. 1st DCA Nov. 17, 2010). To refresh your recollection, Ashe was a case in which a homeowner’s property was damaged by a hurricane, the homeowner was paid policy limits by his flood insurer, and a dispute arose as to entitlement to benefits under his wind policy. Another case in that same vein was recently before a Mississippi federal court in Penthouse Owners Assoc., Inc. v. Certain Underwriters at Lloyd’s, London, No. 1:07CV568-HSO-RHW, 2011 WL 96514 (S.D. Miss. Jan. 11, 2011).

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Policyholders with flood and all risk policies usually do not have as many problems collecting benefits following a hurricane where wind and flood damaged a structure. Those with only one policy are not so fortunate. When the combination of payments from both policies is less than the cost to repair or when delays in payments occur, numerous issues arise.
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