Hurricane Season is Here Again: Preparing for the Worst with the Right Insurance

Hurricane Season is Here Again: Preparing for the Worst with the Right Insurance

By: RT New Day, June 19, 2018

Here we go again. The hurricane season officially began June 1 with AccuWeather predicting three to five major hurricanes between now and November.

Last year, Hurricanes Harvey, Irma and Maria caused nearly $300 billion in total damages, while negatively impacting millions of lives. That’s because even after the flood waters receded, water contaminated by sewage and debris as well as mold and other microbial matter continued to impede cleanup and create health issues.

This is just part of the ongoing pattern. Wrecked homes, miles of flooded real estate and mold everywhere besieged New Orleans after Hurricane Katrina. In Sandy’s aftermath, many homeowners, commercial businesses and public housing authorities spent hundreds of thousands to millions of dollars on mold problems that weren’t covered by many existing insurance policies.

Fortunately, the commercial insurance landscape has expanded in recent years. Previously, most contractors or real estate owners only held commercial general liability or property policies (or builders risk insurance), which lacked the terms needed to effectively repair properties ravaged by water and/or microbial growth (mold or bacteria). Many of these same insureds now have Environmental Liability Insurance – Contractors Pollution Liability (CPL) and/or Pollution Legal Liability (PLL) to protect against such conditions.

Furthermore, most CPL and PLL policies today are designed to offer some form of emergency response or mitigation coverage (to prevent a third-party claim from ever being made) in instances where the event doesn’t qualify as an emergent situation (as defined by the policy). Therefore, it is imperative for insurers and their insurance agents/brokers to be acutely aware of the recovery amounts available to them under these policies as well as the terms and conditions of filing claims on a timely basis.

For instance, in the construction industry there are two important aspects of coverage – the insuring agreement and the claims reporting provision. The insuring agreement or trigger can be occurrence or claims-made. Very simply, if bodily injury, property damage and/or cleanup exposures occur during the policy period, the trigger will provide coverage regardless of when the claim is actually made to the carrier. As for a claims-made trigger, the claim must be made within the policy period for pollution incidents that arise out of services or contracting work performed subsequent to a retroactive date. That’s why claims made policies in the environmental world are truly referred to as “claims-made and reported” policies.

Reporting of a claim or incident in a timely fashion is vital but even more so under a claims made insuring agreement. Insureds who experience water damage/water intrusion or mold growth must be keenly aware of their rights and the policy’s terms and limitations. This is also reflected by the claims reporting provision itself. That’s why it’s so important to understand the policy’s terms and reporting stipulations. Regardless of the trigger, nearly all carriers require strict compliance with claims reporting provisions.

Typical reporting provisions under a CPL policy require insureds to report the potential claims, damages or incidents in a reasonable time frame (usually as soon as practicable but sometimes immediate reporting is required), after a responsible insured is made aware of the exposure. In addition, insureds will typically be required to provide as much detail as possible, while not admitting liability, settling any claim or making payment without carrier consent. Doing so may void coverage.

Unfortunately, no one can truly predict Mother Nature. Going forward we can only prepare for tragedy with tools that can not only help to lessen the devastation, but also aid the reconstruction process  after the immediate impact subsides.

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