[Fri, April 22, 2011] Following the extraordinary weekend of tornadoes, thunderstorms and flooding, unfortunately many homes and businesses suffered water damage. Water damage weather caused by rainstorm, broken pipe or leaking roof is one of the most common and frequent property insurance claims my office handles everyday.

Below I've put together five "first response" suggestions of what I think are important steps to take in case your property suffers water damage:

1)  Eliminate the source of the water. If it is a broken pipe, shut off the water supply and call a plumber to fix the break. Take all valuables out of the way immediately to prevent further loss and unplug all electronics that are close to the flooded area. You have an obligation under the terms of the policy to prevent further damage. Keep all the original parts that are replaced. Keep all repair contracts and receipts.

2)  Contact a licensed and reputable Public Adjuster to assess the damage and review your insurance policy. A competent adjuster will inspect the property in detail and point out things you may not be aware of, suggest measures to prevent further damage, review your insurance policy, discuss the claim process and take detailed photos of the loss.

3)  Report the claim to you insurance company or agent. Be prepared to answer questions such as: When did it begin? What was the cause? Have you done anything to the home? What are the damages? Be careful and thorough when answering. You want to make certain that you give a true and complete picture. Describe all the damage details and don’t leave anything out. If you have hired me as your Public Adjuster, let the insurance company know and give them my contact information. I will then undertake the necessary steps of the claim process.

4)   Document the loss. If you do not to hire a Public Adjuster, make sure to document the loss with photos and supportive documentation. Do not throw away any damaged goods until after an inventory is taken. Make your own loss assessment of items that have been damaged or are irreplaceable, things that may need to be fixed, restored or replaced, business interruption cost, etc.

5)  Call a reputable remediation company immediately. Point out areas of concern when the inspection is being performed. The remediation company will use multiple tools to help with the dry out of your home or business. Please keep all receipts of any repair or maintenance work performed. It is your obligation to reduce water damage or any further impairment. Mold can develop in days following water damage and mold coverage in water damage claims is typically limited to $10,000. It is best to prevent mold from occurring. If you wait for your insurance company adjuster to appear, it may be too late to do a proper remediation job. A professional remediation company should know what they can do without jeopardizing the claim.

If you do not hire a professional remediation company, do not remove material or dry out the property yourself unless your adjuster approves the work beforehand. Otherwise, the adjuster and the insurance company may feel that the work was not required, not done properly or may have caused further damage not covered by your policy. You could then have difficulty getting paid for the work you did and for the cost of restoring the property.

For a no-obligation assessment of your water damage or if you have any questions regarding the claim process, please call me at 954-742-8248 or email me at joe@florida-pa.com

This Weekend's Devastating Storms, Tornadoes and Fires

 [Mon, April 18, 2011] This weekend brought devastating weather to residents of the South. At least 45 people died from tornadoes, thunderstorms, flooding, fire and hail across the southern United States over the weekend, and officials said the death toll may rise as the cleanup continues.

Twisters hit 12 states: Oklahoma, Kansas, Louisiana, Mississippi, Alabama, Missouri, Illinois, Georgia, South Carolina, North Carolina, Virginia and Maryland. The reports are based on preliminary weather service data that the agency warns are often revised downward after more complete information becomes available.

North Carolina accounted for the bulk of casualties and property losses from the weekend weather, with 22 people killed and about 130 others injured. Significant damage was reported in at least 26 counties and power outages affected more than 200,000 people.

The storms began in Oklahoma on Thursday, then moved through the South and hit the East Coast by Saturday. There were 241 tornadoes reported, with 50 confirmed. It is the largest tornado outbreak since 2008.

While the many other parts of the country were suffering from storms and flooding, a severe drought has led to unprecedented wildfires in the Southwest.

Texas Governor Rick Perry has requested a Major Disaster Declaration for the entire state, as brush fires which have burned more than 1.5 million areas continued on Monday. The fires have been whipped by 60-miles-per-hour wind gusts and fueled by brush dried out by record low humidity.

It's been sad and disturbing to watch the latest news coverage of this weekend's devastation in the South.  Knowing fully well the difficulties and complications involved for homeowners to rebuild their properties, deal with insurance companies and restore their homes and businesses - I urge policy holders to call on a licensed Public Adjuster that will assist in the claim process and fight to receive the maximum allowed settlement. No this is not an advertisement, but a sound and worthy advice.

I've witnessed many homeowners struggle financialy due to denied or underpaid insurance claims, please don't make the same mistake. 

[Wed, April 13, 2011] At a time when Floridians blame property-insurance costs as the number one barrier to business growth and the most prevalent drain on their household finances, Florida Insurance Commissioner Kevin McCarty has approved a statewide average 18.8 percent rate increase in State Farm’s homeowners’ policies, which is roughly 10 percent below the 27.9 percent it initially requested.

As reported by the Insurance Journal, the new rates will apply to new policies effective July 1, 2011 and renewals as of July 15, 2011.

In Miami-Dade and Broward counties, where State Farm has more than 65,000 policies, changes will range from a 9.8 percent decrease to a 64.3 percent increase, depending on the type of policy and exact location. Florida has been spared a major hurricane for more than five years, however State Farm maintains that it needs to boost premiums for its 632,000 policyholders because of rising costs unrelated to hurricanes.

In a separate filing, McCarty approved a statewide average increase of 62 percent in the insurer’s commercial multi-peril residential policies. Innitially, State Farm requested an average of 95.7 percent increase. These policies are used to cover homes that are owned by an individual or business that are rented to others.

Some relevant numbers you may find interesting: private insurers took in more than $6 billion in premiums from homeowners' insurance in 2009, the last year for which data was available. They paid out $1.87 billion of that, or 38 percent, in claims. After expenses, salaries and dividends, the industry reported net income of $1.67 billion from you and your fellow homeowners. They netted another $49.5 million from commercial-property policies.

Florida property insurance …No laughing matter.

[Fri, April 8, 2011] Recently several of my blog entries have been devoted to the Japan disaster and the insurance ramifications. An interesting question was subsequently emailed to me by a reader which I will repost here along with my answer.

Question "Curious as to your interpretation - if the Japan event occurred in the US, on a standard ISO property form, with earthquake coverage but not flood. If damage to insured was caused by nuclear radiation from power plant, would nuclear exclusion apply, or is claim payable with earthquake as proximate cause?"

Answer: I would like to thank you very much for your interesting question and for your participation in my blog. The recent disaster to strike Japan certainly saddens all of us as to the loss of life, human and wildlife, the emotional and physical pain that the population of Japan would have to deal with for many years to come. In addition, and as if that is not enough, many questions come to mind as to the overall financial loss in a global economy still trying to recover. Should this disaster hit on U.S Soil what consequences would the Insurers face with most Policies being written the way we are used to seeing?

In order to understand the nature of the financial loss to buildings, properties and income, we have to first understand the process of the different perils that contributed to the losses as those were incurred in Japan. Once we have a clear picture of the cause of the loss, we can then examine the Policy Language offered by the Insurers and determine a hypothetical scenario should it happen on U.S soil. The earth quake to strike Japan (reported 9.1 on Richter scale), one of the most powerful quakes ever recorded, has caused much damage to buildings, structures, roadways, businesses and infrastructures. One in particular, the Fukushima Nuclear Power-Plant.

The March 11, 2011 Tōhoku earthquake resulted in maximum horizontal ground accelerations of 0.21 g (2.10 m/s2) to 0.28 (2.77 m/s2) at the plant site, which is well below the design basis. All four units were automatically shut down immediately after the earthquake, according to NUCLEAR ENGINEERING INTERNATIONAL, and the diesel engines were started to power the reactor cooling. TEPCO estimated that the tsunami that followed the earthquake and inundated the plant was 14 meters high which is more than twice the designed height. This flooded the pump rooms used for the essential service water system transferring heat to the sea, the ultimate heat sink of the reactors. While the cooling system for unit 3 was undamaged, the other reactors were affected. The cooling systems remained operational, but heated up due to the lack of a heat sink. The high pressure coolant injection (HPCI) system (powered by reactor steam) was used as additional cooling. On March 12, the cooling system for three reactors (numbers 1, 2 and 4) at the torus had topped 100 °C between 05:30 and 06:10 JST rendering all cooling systems (depending on temperature difference between the torus and the reactor) ineffective.

The coolant systems in the pump room were repaired and activated in Units 1, 2 and 4 in the days following the emergency shutdown after cooling could recommence Coolant temperatures below 100 °C (cold shutdown) were reached in reactor 2 about 34 hours after the emergency shut down SCRAM Reactors 1 and 3 followed at 1:24 and 3:52 on March 14 and Reactor 4 at 7:00 on March 15.The loss of cooling water at reactors 1, 2 and 4 was classified a level 3 on the International Nuclear Event Scale (serious incident) by Japanese authorities as of March 18. Officials made preparations for release of pressure from the plant on March 12. As of March 20, however, no pressure release had been reported.

An evacuation order was issued to people living within 3 kilometers (1.9 mi) of the plant, subsequently expanded to 10 km (6.2 mi). Air traffic was restricted in a 10 km (6.2 mi) radius around the plant, according to a NOTAM these zones were superseded by the 20 km evacuation and 30 km no-fly zones around Fukushima I on March 12 and 15, respectively. TEPCO announced that a worker who had been seriously injured by the earthquake and trapped in the crane operating console of the exhaust stack was transported to the ground at 5:13 p.m. and confirmed dead at 5:17 p.m. Smoke was escaping from one of the buildings on 30 March 2011. It was emitted from equipment which supplies electrical power to a motor pump that collects outdoor water and stopped after workers disconnected the motor.

-COVERAGE ANALYSIS-

Background Information
The introduction of the nuclear exclusion on coverage forms came in 1957, the same year in which the Price-Anderson Act became law; this law required evidence of financial responsibility for all privately owned nuclear reactors. Due to the possible catastrophic potential of nuclear contamination, the financial responsibility requirement had to be met economically through the use of insurance. However, insurers were not willing to offer such insurance coverage on standard lines policies and so; the nuclear exclusion clause was attached to virtually all fire policies by endorsement or as part of some other form. The language of the clause was as follows:

Loss by nuclear reaction or nuclear radiation or radioactive contamination, all whether controlled or no controlled, or due to any act or condition incident to any of the foregoing, is not insured against by this policy, whether such loss be direct or indirect, proximate or remote, or be in whole or in part caused by, contributed to, or aggravated by any of the perils insured against by this policy; and nuclear reaction or nuclear radiation or radioactive contamination, all whether controlled or uncontrolled, is not considered "explosion" or "smoke." In addition to this exclusion, the policies discussed and clarified the relationship between the peril of fire and nuclear reaction.

The discussion centered on a particular clause that was worded as follows:

The word "fire" in this policy or endorsements attached hereto is not intended to and does not embrace nuclear reaction or nuclear radiation or radioactive contamination, all whether controlled or uncontrolled, and loss by nuclear reaction or nuclear radiation or radioactive contamination is not intended to be and is not insured against by this policy or said endorsements, whether such loss be direct or indirect, proximate or remote, or be in whole or in part caused by, contributed to, or aggravated by "fire" or any other perils insured against by this policy or said endorsements; however, subject to the foregoing and all provisions of this policy, direct loss by "fire" resulting from nuclear reaction or nuclear radiation or radioactive contamination is insured against by this policy.

The language of the clauses dealing with nuclear contamination or reaction, then, showed an intent to exclude practically all loss, whether direct or indirect, except that by fire resulting from nuclear reaction or radiation. However, in the one major test to date in the United States, the Three Mile Island incident that occurred in April 1979, several insurance companies surveyed by The National Underwriter took the position that the nuclear exclusion clause, at least in the homeowners policy, does not apply if the home is vandalized or burglarized after it has been evacuated due to the threat of nuclear contamination. It was felt that since "the vandalism and theft are not a direct result of any contamination, the nuclear exclusion clause does not apply." Furthermore, the exclusion itself stated that nuclear reaction or contamination is not explosion or smoke, thereby implying that losses due to such perils are covered even if caused by a nuclear reaction. Thus, the exclusion was not as omnibus in its application as perhaps was originally planned.

However, just as the early fire policies have evolved into the current property coverage forms, so has the nuclear exclusion clause been revised. Several property insurance forms and the nuclear exclusion clauses on those forms are discussed below.

The Nuclear Clause and Coverage Forms
The homeowner’s forms contain a nuclear hazard exclusion that refers to the conditions section of the coverage form. The nuclear hazard clause in the conditions section states that the policy does not apply to loss caused directly or indirectly by nuclear hazard, except that direct loss by fire resulting from the nuclear hazard is covered. Nuclear hazard is defined as "any nuclear reaction, radiation, or radioactive contamination whether controlled or uncontrolled or however caused, or any consequence of any of these." Loss caused by the nuclear hazard will not be considered loss caused by fire, explosion, or smoke, whether these perils are specifically named in or are otherwise included within the perils insured against section of the policy.

The nuclear hazard exclusion in the farm property coverage form is somewhat simpler and more definite. This exclusion states that the insurer will not pay for loss or damage caused directly or indirectly by nuclear reaction, radiation, or radioactive contamination however caused. The form does, however, keep with tradition and continues the exception for loss or damage by fire that results from a nuclear reaction.

The commercial property policy has the causes of loss and the exclusions listed on a separate form, depending on what causes of loss the insured wants covered. Regardless of whether the insurance is under the basic form, the broad form, or the special form, loss or damage caused directly or indirectly by nuclear reaction or contamination is excluded; as with other property forms, loss or damage by a resulting fire is insured. All three forms also have a separate clause that states that the insurer will not defend any claims or lawsuits or pay for any expenses resulting from nuclear reaction, radiation, or contamination. This clause seems to belong on a liability form, but it simply reinforces the insurer's intent not to pay any damages that have anything to do with a nuclear hazard.

The nuclear hazard exclusion on the builders risk coverage form is handled with the same wording as in the preceding paragraph.

The nuclear hazard exclusion on the business owner’s policy has the same wording as the other commercial property coverage forms, but the separate clause concerning the refusal to pay for claims or defense is absent.

The equipment breakdown form contains slightly different nuclear hazard exclusion in that the exception to the exclusion for damage by resulting fire is not part of the clause. The nuclear hazard exclusion clause refers only to loss caused by or resulting from nuclear reaction, radiation, or contamination however caused.

Most of the inland marine forms have a nuclear hazard exclusion that precludes coverage for a loss caused directly or indirectly by any weapon employing atomic fission or fusion, or by a nuclear reaction, radiation, or contamination from any other cause; direct loss caused by a resulting fire would be covered if the fire is insured against under the coverage form.

The mail coverage form is different in that, while damage from atomic weapons is excluded, the nuclear hazard as such is not mentioned in the form.

The personal automobile physical damage coverage excludes loss due to or as a consequence of radioactive contamination. Loss caused by the discharge of any nuclear weapon is also excluded even if the discharge is accidental.

Under the business auto coverage form, physical damage coverage section, the wording of the nuclear exclusion is a bit different. The exclusion on this form applies to the explosion of any weapon employing atomic fission or fusion; it also applies to nuclear reaction, radiation, or radioactive contamination, however caused. The garage coverage form and the truckers form also have this wording in their respective physical damage sections.

The nuclear exclusion on the crime forms is simple and to the point, perhaps owing to the fact that a crime loss caused by nuclear or radioactive contamination is not exactly a common occurrence. The exclusion on the various crime forms states that the coverage will not apply to "loss or damage resulting from nuclear reaction or radiation or radioactive contamination, however caused"; a rather all-encompassing and generalized phrase, but a phrase that, in all probability, would not be the subject of many legal disputes due to such a minor chance of a crime claim arising from a nuclear loss.

Finally, it should be noted that for information on the nuclear exclusion found in liability forms, see Nuclear Energy Liability Exclusion.

The commercial property causes of loss forms have an interesting clause dealing with legal liability coverage and nuclear hazard. Legal liability coverage is, of course, an agreement whereby the insurer agrees to pay those sums that the named insured becomes legally obligated to pay as damages because of a direct physical loss or damage (including loss of use) to covered property; the loss has to be accidental and arise out of any covered cause of loss. Though this pertains to legal liability, the coverage is offered under a property form. In any case, the causes of loss forms state that the nuclear hazard exclusion does not apply to the legal liability insurance that the insured has purchased. One might then think that, for example, if a tenant causes damage to his landlord's building due to nuclear or radioactive contamination (however caused), and that tenant is held legally liable for the damages, the legal liability coverage form would respond and pay those damages for which the insured is liable. Not so. The clause goes on to state that the insurer will not defend any claim or suit, or pay any damages or expenses resulting from nuclear reaction, radiation, or contamination, however caused. What this clause does, in effect, is to exclude the insured's legal liability coverage for damage due to the nuclear hazard. However, this clause does allow legal liability coverage for any damage done by a resultant fire. So, if the insured tenant is legally liable for damage done to his landlord's building as a result of nuclear contamination and a fire that ensued from that contamination, the cause of loss form would respond to the fire damage (fire legal liability) but not to the nuclear contamination damage.

Relation to the War Exclusion
It is important to note that there is no necessary relationship between the various war exclusion and governmental action clauses on the one hand and the nuclear clauses on the other. They are entirely separate things. The language in the older fire forms concerning discharge of a weapon of war employing nuclear fission and the like.—which was part of the war exclusion clause—was for some years the only direct reference to nuclear energy. Today, however, the nuclear clause stands on its own and the war exclusion clause speaks of war in general and does not concern itself with the discharge of nuclear fission weapons.

-CONCLUSION-

When analyzing coverage the following steps have to be performed

• Cause and origin investigation - The cause and origin of the loss would trigger the coverage insured against (or excluded) of a specific peril. Once a determination has been made to the cause of loss, the Insurer can interpret the Policy Language respective to the event. In this case (the Japan Disaster) we have three different events associated with the disaster. An Earthquake(1) that triggered a Tsunami (2) generally described as "flood" in most policies, and as a result, damaged a nuclear Power Plant which released Nuclear Contamination (3)
• Earth quake - In the U.S, most ISO Policies do not exclude damage caused by Earthquake. based on the above, all damage caused by the Earthquake should be covered under most Policies
• "Flood" - Basic Homeowners Policies, Commercial Policies, do not generally cover "flood". Flood insurance is mandated by the Federal Government under the NFIP program and is serviced with different Insurance carriers. Although "flood" coverage is offered, not too many consumers tend to purchase it. This usually stems from erroneous evaluations of risk or simple neglect of agents and brokers not offering the same. In the event and insured carries "flood" Insurance, in most cases the policies are limited to $250,000.00 which in many cases will not be enough to cover repair or replacement costs as a result of a "Tsunami"
• Nuclear Contamination - Under the Proximate cause provision, the original loss - the Earth quake, triggered the Tsunami which damaged the nuclear Plant. the "ensuing loss" the Nuclear contamination, would cause damage which is specifically excluded in the following manner: "Loss by nuclear reaction or nuclear radiation or radioactive contamination, all whether controlled or no controlled, or due to any act or condition incident to any of the foregoing, is not insured against by this policy, whether such loss be direct or indirect, proximate or remote, or be in whole or in part caused by, contributed to, or aggravated by any of the perils insured against by this policy; and nuclear reaction or nuclear radiation or radioactive contamination, all whether controlled or uncontrolled, is not considered "explosion" or "smoke." However, should the nuclear event cause or contribute to a fire in the insured property, the damage from that fire will be covered. In other words, if the building is contaminated by nuclear waste, this damage is not covered, however, if a resulting fire destroys the building, this damage is covered.
• While adjusting such loss, the first damage the building sustains from the Earth Quake will prevail over any other over lapping ensuing losses. In other words, if a wall collapses during the Earth Quake, and then gets water damaged from the Tsunami, and finally gets contaminated by nuclear activity, the insurer must pay the claim first on the adjustment of the collapse, then add the water damage created by the flood. Finally, the nuclear contamination portion of the damage not yet paid for will be excluded. 

Here is an example:

House with HO-3 Policy with a $300,000.00 limit of insurance under Coverage A is located in the Earth Quake Zone and sustains damage in the amount of $150,000.00. The Tsunami adds $50,000.00 damage. The Nuclear pollution causes the structure to be condemned. Building Insurer will pay the first $150,000.00. The Flood Insurance Company will pay the $50,000.00 adjuster flood loss. The additional $100,000.00 will be excluded. Other coverage’s such as Law and ordinance, ALE, Contents should also be adjusted the same way.