Friday, January 07, 2005

Parsing of the Peril

Today's Pensacola News Journal devotes its spare 'one-a-day editorial' to the bonehead move by Citizens Property Insurance to file a 'test' suit against a disabled war vet. The title is 'Insurance Company Lawsuit Unfairly Changes Playing Field'.

The editorial makes several of the same points we also mentioned the other day down thread. As the newspaper says --
'This litigation could take years. That creates an untenable situation for people already frustrated by delays... . * * * [I]f the law is to be changed, it should be done after all current claims are settled and it should include strong provisions guiding how the determination will be made on dividing responsibility for the damage.'
That last point about "dividing responsibility for the damage" is a good one, well informed by the reality of what's happening here on the ground in Pensacola. Virtually every homeowner with hurricane damage knows it, too.

Many insurance adjusters working the Panhandle, it seems, have been trying to attribute as much 'damage assessment' to flooding water as they can. This undoubtedly is because for most home owners in a flood plain, insurance policies covering surging water are less generous (other than, perhaps, when it comes to the deductible) than most other forms of property insurance. The National Flood Insurance Program arbitrarily imposes a fixed maximum on policy limits that bears little relation to actual market value or replacement costs of a damaged structure. Furthermore, payments for flood damage ultimately come straight out of the federal treasury instead of a private insurance company's reserves.

Consequently, all windstorm insurance companies have what might be called a personal interest in parsing the cause of storm damage to see that as much as possible is attributed to flooding water rather than high winds. As George Kehrer, executive director of Community Assisting Recovery told The just before the hurricane season began last summer:
insurance adjusters ... are likely to appear helpful. But don't confuse their interests with yours... . * * * "They're friendly, but they're not your friend," he says. "Their job is to save money for the company."
In fact, Pensacola could be the poster child for that aphorism. A month ago, we made national news again when USA Today reported:
A legal aid center set up in Pensacola after Hurricane Ivan hit Sept. 16 fielded more than 1,500 complaints during its first month. Among concerns: Homeowners... were told that their policies cover wind storms —- but now find that they won't pay for all damage because most of it was caused by flooding.
As many locals in the Pensacola area are learning, when peak hurricane forces of both wind and water rage together for more than 18 hours, arbitrarily parsing the cause of damage between two forces of nature becomes a highly subjective art. Not surprisingly, confusion over attributing that damage to wind or water ranked high in public concern throughout Florida , according to last fall's poll by Gannett Corporation's media outlets.

It ought to rank high with our state legislators, too. As everyone who has lived through one knows, by definition a hurricane involves both high wind and surging water. FEMA's own web site explains, "As a hurricane nears land, it can bring torrential rains, high winds, and storm surges."

Policies promoted, marketed, and sold as 'hurricane insurance' ought to cover all hurricane storm damage, whatever the immediate physical engine of destruction may have been. It makes no sense to micro-parse the peril of a hurricane by physical causes which are inherent in every named tropical storm and which so closely interact with each other. One might as well allow insurance companies to sell "fire policies" that don't cover damage from smoke or high heat.


Anonymous said...

No insurance company sells hurricane insurance. They sell insurance for your home, your building or your tenancy in a building.

These policies are essentially all the same (the differences would fill many pages) in that they do insure for damage from wind, flying debris and water damage if the building is torn open by wind or flying debris.

None of them cover flood. No company can afford to cover flood, that is why the federal government has the NFIP.

That is why the insurance companies must draw a line between the flood damage and the wind damage. Sometimes it can be clear and sometimes not, so obtaining a fair evaluation is difficult. Did the adjuster make the decision or did they bring in an expert, like an engineer or construction specialist?

If you want to demand that the State create a "hurricane" policy, be prepared to not be able to afford it. You are already going to be looking at higher premiums and higher deductibles as it is. The debacle of Citizens highlights the folly of having the government create an insurance program.

Lila said...

George Kehrer and his organization CARe (Community Assisting Recovery) really saved our rear when our house was lost to the California wildfires in 2003. We've learned a lot and would love to help any other disaster survivors who have questions about the recovery process.