Foran Glennon Palandech Ponzi & Rudloff

October 2017

Hurricanes Harvey and Irma White Paper

The insurance claims from Hurricanes Harvey and Irma will pose challenges beyond the expected coverage issues raised by the storms and the damage they caused.

Hurricanes Harvey and Irma mark the first time two Atlantic Category 4 hurricanes made landfall in the U.S. in the same year. Hurricane Harvey is the wettest tropical storm to hit the continental United States. Harvey generated so much rain that the National Weather Service (NWS) had to update its color charts in order to track it. Like Harvey, Hurricane Irma is one for the record books. “Hurricane Irma is the strongest Atlantic basin hurricane ever recorded outside the Gulf of Mexico and the Caribbean Sea,” said Brandon Miller of CNN. The 400-mile-wide storm reshaped beaches, forced evacuations, ruined houses, and flooded cities throughout Florida, Georgia, and South Carolina. For comparison, Hurricane Katrina spanned an area 300 miles wide.

Harvey and Irma will force residents and businesses in the southern United States to address many issues that they have not faced in a long time. Both hurricanes brought catastrophic conditions to largely populated areas, which have not been tested by an insured event on this scale in decades. Hurricane Ike, which made landfall in Texas in 2008 as a Category 2 hurricane, was the prologue that should have reinforced lessons learned in the Gulf and Southeastern United States from Katrina, Rita, Charley, Ivan, Francis, Jeanne, Wilma and others. Even still, thousands of victims will, for the first time, find themselves dealing with hurricane deductibles, the need for flood insurance, and whether policy limits or reported values accurately reflect the true costs of replacement.

The scope of potentially covered losses will be as broad as Harvey and Irma were wide. Physical damage from storm surge, wind, rain, flood, and sewer backup is accompanied by business interruption losses from service interruption, broken supply chains, closure by order of civil authority both before and after the hurricanes, and depopulation of certain areas. Beyond dealing with the challenges posed by the storm itself, both state regulators and Mother Nature have further complicated matters. Federal and state governments were quick to respond to Harvey and Irma with emergency bulletins and regulations easing burdens on insureds. Mother Nature, as if she had not already done enough, brought a slew of tornadoes through the hurricanes’ wakes, generating even more destruction. The task of parsing damage attributable to the various perils that attended Harvey and Irma will be complicated by this subsequent destruction.

This paper will discuss the most common coverage issues applicable to the adjustment of hurricane claims. Because most of the damage from Hurricane Harvey occurred in Texas, and most of the damage from Hurricane Irma occurred in Florida, we highlight Texas and Florida law. As always, however, we remind you to perform a choice-of-law analysis prior to relying on any one state’s case law. For example, many policies designate the application of New York law. As such, we also highlight relevant New York law where appropriate. Finally, we analyze the law of other Gulf States where particularly relevant to insurance claims arising out of prior hurricanes.

To read and/or download the full White Paper, in PDF form, please click the link below:

Hurricanes Harvey and Irma White Paper