Superstorm Sandy: Deductible Debacle
Despite the obvious physical destruction, the fallout from Superstorm Sandy also created controversy amongst insurers and state regulators surrounding the contract language involved with damages resulting from Sandy claims.
It all started when the National Weather Service downgraded “Hurricane Sandy” to “Superstorm Sandy”. Claiming Sandy’s winds never reached hurricane strength in certain locations; state regulators within several jurisdictions have pronounced “hurricane” deductibles not valid; affording homeowners a financial break from hefty “hurricane” deductibles on damages resulting from Sandy claims. Generally ranging from one to five percent of a home’s insured value, “hurricane” deductibles can cost as much as $15,000 on a home insured for $300,000.
Jurisdictions in which “hurricane” deductible are not valid include:
- New York
- Rhode Island
- New Jersey
- District of Columbia
The only jurisdiction exception being North Carolina, as Sandy was still classified as a “hurricane” when it touched ground there.
On the other side, insurers have voiced concern to state regulators that political manipulation from these types of “state decisions” weakens the private insurance market. Insurers have apprehension that if state regulators are left to discern insurance “contract language, ” insurance companies will in years to come, start to rethink how much coastal risk they can afford to underwrite given the states actions.
We understand your need to complete a damage claim as accurately and efficiently as possible; particularly during, and following catastrophes. Whether it is damage due to environmental forces such as wind, water, hail, snow, tornado, etc.; safety assessments; repair recommendations; or any other claim, the engineers at Pie understand that both you and your client want a rapid resolution.
From Hurricane Katrina to the Joplin, MO Tornado, Pie has the capacity and resources to assist with storm-damage claims including:
- Property Damage Scope & Cost Analysis
- Roofing System Damage Assessment
- Structural Damage Assessment (Repair vs. Replacement)
- Wind vs. Rising Water Damage Determination
- Pre-Existing vs. Storm-Damage Determination
- Repair Design & Specifications
There are numerous similarities between Hurricane Sandy and Hurricane Katrina including the amount of measured rainfall and the amount of storm surge and flooding. Moreover, Superstorm Sandy left many areas covered in crippling snow and left structures in precarious positions with dangerous snow loads.
Similar to Katrina, a large number of insurance claims resulting from Hurricane Sandy will require the determination of whether the damage was caused by wind or caused by water. Compounding the issue, claims will also require a determination on the source of water (i.e. did the water originate from infiltration through the building envelope (roof or walls) or was the water due to flooding). Flooding and rising water could be the result of swelling rivers, storm surge, inundated drains, and sump pump failures.
Determining the root cause of the damage will be necessary as most owners’ insurance policies do not cover damage from flooding and owners must buy flood insurance separately as part of a FEMA managed program. While some owners are required to purchase separate flood insurance as part of their mortgage due to their location, other areas outside of these flood-prone areas commonly experience flooding during these large hurricane events.
Our experience handling previous disasters, including Hurricane Katrina, revealed that most of the damage to structures was due to water and flooding and it was difficult to find structures that were only damaged as a result of wind. An accurate allocation of wind damage versus water damage, including an allocation of the repair costs associated with each causation, will be required by insurers as part of their analysis of Hurricane Sandy claims.
Our expert Forensic Services and Property Damage Scope & Cost Analysis Groups are currently handling claims along the east coast and are ready to assist! Call us at 303-552-0177 or 866-552-5246 with your immediate questions.
- Some Homeowners Unexpectedly Hit With ‘Windstorm Deductible’ (insurancejournal.com)
- Hurricane Sandy: Insurers complain storm downgrade will cost them $20bn (telegraph.co.uk)
- Will home insurance cover Sandy? (bankrate.com)
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