Severe Flooding In Florida Panhandle and Alabama Create Adjustment Issues

May 2, 2014

USA TODAY reported on April 30, 2014, that severe flooding followed a record rainfall from the severe storm system that has brought death and destruction across the southern United States. The National Weather Service reported that more than 5 inches of rain fell between 9 p.m. and 10 p.m. Tuesday (April 29th) in Pensacola, surpassing the entire total rainfall from Hurricane Ivan in 60 minutes. The Associated Press reported that nearly 2 feet of rain fell on the Florida Panhandle and Alabama coast. Insurers should be prepared to deal with the many adjustment issues that arise from such a disaster. The answers may vary widely from state to state. Although each claim is unique on its face, here are some of the things that you should consider when making preparations to handle the expected losses from this event:

1. Wind versus water; flood coverage versus wind or all risk? Often handled by different adjusters, communication and documentation are essential.
2. Whether any interior water damage was the result of an opening in the roof or walls caused by wind or other covered causes of loss, e.g., hail or falling trees?
3. Damage caused by surface water, storm drainage backups or sewage backups, and whether the applicable policy excludes or limits damages from these causes? 
4. When adjusting a storm loss, are you prepared to handle the necessary communication needed to keep your Insureds informed following a disaster? Some states, like Florida, have mandatory deadlines within which an insurer must respond to an inquiry from a policyholder.
5. Residential or commercial or small commercial? Some states, like Florida, have different rules and deadlines for each category.
6. The procedure and scope of appraisal differ widely. Have you considered the differences and how to deal with each?
7. The Departments of Insurance have procedures in place to assist with the resolution of disputes before they rise to the level of full-blown litigation. Have you considered utilizing these procedures when adjusting storm claims? In Florida, they are mandatory in residential claims.
8. Are you prepared to effectively deal with and properly document the “initial” payments (such as Additional Living Expenses) that normally accompany disasters of this nature?
9.  Many commercial entities such as hotels have properties in more than one state. Have you considered which state’s law will govern the Insured’s loss?
10. The impact of the valued policy laws of the different states that will be affected by this storm.
11. Property damaged while the foreclosure is pending. Who has an insurable interest? How much is that interest?
12. Will you be legally obligated to deal with a public adjuster or not? The answer will depend on the state in which the property is located.
13. Have you considered the impact of the state’s bad faith law when it comes to the investigation and adjustment of post-disaster claims?

This is but a small sample of the many issues that insurers and their policyholders will no doubt struggle within the aftermath of this severe storm. The experienced attorneys at Butler Pappas stand ready to assist in providing answers to these issues. Our property insurance partners have vast experience counseling insurers and litigating their interests arising storms across the Gulf Coast states.

For more information and advice on these or any other questions, contact our attorneys in our Tampa, Tallahassee, Mobile and Charlotte offices.