Hurricane Ike, and insurance exclusions

An illustration of what happens when societies encourage development in areas that are known to be vulnerable to windstorms and floods. Deborah Senn in the Huffington Post: .…Sadly, thousands of Texas Gulf Coast storm victims who are now picking up the pieces after Hurricane Ike may be in for a shock when they file insurance claims and try to collect. …[M]ost policies contain a troublesome little clause known as Anti-Concurrent Causation, or ACC. This typically convoluted insurance term spells big trouble for consumers because it lets insurers deny coverage for most, if not all windstorm losses when flood-related damage -- normally excluded in standard property policies -- is also involved.

….The chicken-or-egg debate over whether wind or water contributed the greatest damage to property has been around a long time, but Hurricanes Katrina and Rita in 2005 triggered an unprecedented mass of consumer complaints and challenges to insurer denials. An important principle of insurance law has always been that if policy language is ambiguous, than the decision should redound to the benefit of the policyholder. While thousands of cases remain to be resolved as a result of Katrina and Rita, the trend is becoming clear: a string of court rulings have found ACC clauses to be "unambiguous," handing insurers a significant legal victory.

…More exclusions mean less protection for property owners. In coastal areas of Texas, Louisiana and Florida, this means that coverage against wind damage is harrowingly narrow, confined to relatively rare incidents of high winds unaccompanied by rain or storm surge.

…. Private insurers as well as state-backed high risk insurance pools that sell coverage in areas where the private carriers refuse to tread, all have an obligation to inform the public in clear English what the contract covers and what it does not. State regulators should play a more active role. And the age-old principle: caveat emptor... let the buyer beware, has never been more important.

Floods in Old Mandeville due to Hurricane Ike, shot by Tobin, Wikimedia Commons via Flickr, under Creative Commons Attribution ShareAlike 2.0 License (cc-by-sa-2.0)