Hurricane Sandy has left more than damage behind. Hurricane Sandy has spun off a little confusion about Hurricane Deductibles and the millions of Northeastern Homeowners who will be making Hurricane Damage Claims on their Homeowner's Insurance Policies. It will make a difference to every one of them, because if Hurricane Deductibles apply instead of standard Homeowner's Policy Deductibles, these Homeowners will be paying a lot more of their own money before they can make a claim. See also Beth Pinsker Gladstone, "Homeowners Dodge Sandy Deductibles, Face Other Costs" (Reuters, Thursday, November 1, 2012).
The damage in Hurricane Sandy's wake is pretty well known, and becoming more well known with each passing day. The confusion over Hurricane Deductibles began around Halloween and it lingers.
A standard Homeowner's Policy Definition of a "Hurricane" for purposes of applying a "Hurricane Deductible," or not, is this:
Definitions
As used in this endorsement hurricane means a storm system that has been declared to be a hurricane by the National Hurricane Center of the National Weather Service. The duration of the hurricane includes the time period, in this state:
1. beginning at the time a hurricane watch or hurricane warning is issued for any part of this state by the National Hurricane Center of the National Weather Service;
2. continuing for the time period during which the hurricane conditions exist anywhere in this state; and
3. ending 24 hours following the termination of the last hurricane watch or hurricane warning for any part of this state by the National Hurricane Center of the National Weather Service.
Spansel v. State Farm & Fire Casualty Co., 683 F. Supp. 2d 444, 451 (S.D. Miss. 2010)(Hurricane Katrina case).
Application of this Policy Definition is a pretty straight-forward question of fact which Courts are used to handling, as indeed it was a straight-forward question of fact in the Spansel case itself. (The District Court ultimately held in that case that in accordance with Mississippi Law, "the Hurricane Deductible Endorsement does not create coverage for storm surge." Spansel v. State Farm & Fire Casualty Co., 683 F. Supp. 2d 444, 452 (S.D. Miss. 2010).)
Hurricane Sandy is responsible for damage, but not for confusion over the Hurricane Deductible. The confusion began when Hurricane Sandy made landfall. At that time and afterward, or so it has been reported, the National Weather Service declared that Sandy was "a post tropical storm" rather than a Hurricane. Mary Williams Walsh and Shaila Dewan, "Governors Promote Lower Deductibles for Homeowners" (New York Times Online, Wednesday, October 31, 2012). This left a question of fact, which some have misunderstood as a question to be decided by "state officials, who regulate insurance, to declare how the laws would be administered." Id.
Good politicians and governors that they are, Governors Cuomo of New York, Christie of New Jersey, and Malloy of Connecticut all apparently issued press releases on Halloween "that the lower deductibles [and not the higher Hurricane Deductibles] would apply to homes in their states." Id. See Ann Carrns, "A Refresher on Hurricane Deductibles and Flood Coverage" (Bucks Blog on New York Times online, Tuesday, October 30, 2012, updated on Wednesday, October 31, 2012). These press releases represent good politics, but they do not represent law.
For how the law will declare your Homeowner's Policy, and your clients' Homeowner's Polices, read the Policies. And know that ultimately if necessary, Courts exist to decide controversies over questions of fact, as well as issues of law.
Please Read The Disclaimer.
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