Florence Drenches the Carolinas in Test of Flood Insurance Policies
The extent of the insured damage caused by Hurricane Florence is still unclear, but some experts are drawing parallels to Hurricane Harvey because, like that storm, Florence is a multiday rainfall event, while others caution against such comparisons.
The battle ahead
Harvey didn’t trigger much litigation over whether the flooding was triggered by wind or rain, in part because that storm, unlike previous storms, was generally recognized as a rain event since it stalled over the Houston area, policyholder attorneys noted.
“The insurance industry was pretty successful in cutting that off with policy changes,” said John Heintz, a Washington-based partner with Blank Rome LLP. “I didn’t see a lot of business-related insurance litigation out of Harvey.”
But that may not be the case for Florence, as there will be a fight over whether Florence was a wind-related event, a rain-related event or a storm surge event, said Alan Rubin, a New York-based principal and member of Blank Rome’s severe weather emergency recovery team. Insurers could try to invoke anti-concurrent causation clauses, meaning that if an excluded peril contributes either directly or indirectly to a loss, then coverage is excluded, even if a covered peril contributed to the loss, he said.
“Insurance companies are going to try to play that game,” he said. “The policyholders are going to be in a fight with the insurers right from the get-go.”
“The unfortunate answer is that most people will not have flood coverage,” Mr. Heintz said. “As a result, the argument will be that this is all water-driven, and certainly the reporting supports that. There are going to be a lot of folks without any insurance coverage.”
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