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November/December  Volume 28, Number 6        

personal injury

Five Lessons from Recent Hurricane Losses

Wind and water aren’t the only financial dangers from a hurricane.

Hurricane Deductible Warning

Business owners with property insurance policies are accustomed to fixed-dollar deductibles. However, some people don’t realize that because of the catastrophic nature of hurricanes, property losses in states prone to hurricanes are subject to percentage deductibles. The insurance industry started using percentage deductibles (applied as a percentage of the insured value) after Hurricane Katrina in 2005 to help control their catastrophe exposure, but also to keep premiums down. For example, a two percent hurricane deductible on a building insured for $500,000 would be $20,000. Until this year, hurricane deductibles have not been triggered on a very large scale. If you think you might need more hurricane coverage, please contact us.

Beware of Buying Flood Damaged Cars

Recent hurricanes have caused flooding that completely or partially submerged more than a million vehicles worth over $5 billion. If the vehicle is no longer operable, the insurer will pay the owner its value and resell it as “salvage” at auction. Unscrupulous auto dealers will sometimes purchase these vehicles, attempt to disguise the damage and resell them without disclosing the damage on the title. This practice, called “title washing,” is illegal but common. The National Insurance Crime Bureau offers a free service called VINCheck that car buyers can use to check a vehicle’s history, including whether it’s ever been declared “salvage.” http://tinyurl.com/25swr2w

Charitable Solicitation Rip-off Tip-off

Fraudsters often take to the phones or the internet after a major catastrophe to prey upon people’s sympathies. Some of the tip-offs that these folks are not legit include:

  • Asking for cash or requesting money to be wired
  • Calling to offer thanks for a donation pledge you don’t remember making
  • Using pressure tactics to elicit a donation
  • Not being able to prove the donation will be tax-exempt

To be certain your donation is going where you intend, contribute to well-known groups such as the American Red Cross or the Salvation Army. Ask organizations you’re unfamiliar with to send the request by mail so you can have a chance to research them online. You might also want to ask how much of your dollars will actually go to help victims. And don’t give out your credit card or bank authorization numbers unless you’re absolutely sure of the organization’s legitimacy.

Don’t Let a “Bad Apple” Cost You 15% of Your Settlement

When a catastrophe occurs, most insurers are accustomed to dealing with it and will quickly deploy teams of staff and independent adjusters to the scene. But sometimes public adjusters, who are licensed in 44 states, also show up. They will promise to get policyholders a better, quicker settlement, restore business operations faster, and probably suggest that taking an adversarial role with the insurance company will get the policyholder a better outcome. They will also charge up to 15 percent of the settlement for their services.

“Some public adjusters may try to exploit the confusing flood aftermath with insurance schemes,” said Jim Quiggle, director of communications for the Coalition Against Insurance Fraud (The Coalition), to PropertyCasualty360. “Most are honest, but the bad apples could be a big problem for insurers and desperate [business owners].”

Policyholders should also be cautious about contractors recommended by public adjusters. “Public adjusters might charge an illegally large fee and then disappear without managing the claim,” warns Quiggle, who also says that sometimes kickbacks are paid by contractors to “bad apple” public adjusters.

What does your business property policy cover? And what does it omit? Contact us for a policy review.

Wind or Water Matters

Catastrophes like hurricanes often result in losses from more than one peril. For example, there may be property damage from both wind and water. Which peril caused the loss? In what order? If there are two policies involved, one for wind damage and one for flood, how should the loss be apportioned?

These determinations often depend on which doctrine of causation applies. Some jurisdictions use the “efficient proximate cause doctrine” while others subscribe to the “concurrent causation doctrine”.

The efficient proximate cause doctrine says that when there is more than one peril involved, the peril that set the other perils in motion — the “efficient cause” — is the one that caused the loss.

The other, more liberal, approach is the concurrent causation doctrine. It says that when more than one peril is involved, the loss will be paid as long as one of the covered perils is insured.

In American Home Assurance Co. v. Sebo (2013), the Florida Supreme Court recently adopted the doctrine of concurrent causation to rule in favor of policyholders seeking coverage for claims where there were multiple concurrent losses with at least one of the losses covered. That decision will surely impact claims filed in the wake of Hurricane Irma.

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In this issue:

This Just In...

Five Lessons from Recent Hurricane Losses

Was Vegas Shooting Foreseeable?

Avoiding Winter Storm Damage

Ways to Fill Winter Storm Insurance Gaps



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