Broker Check

Hurricane Ian Losses - Wind Versus Water

October 04, 2022

Estimates of property damage from Hurricane Ian are as high as $100 billion, of which $63 billion is insured. What determines whether a loss is insured, and if so under what policy? Standard business property and homeowners policies exclude flood, including storm surge. (Warning: if you've read one property insurance policy you haven't read them all. Some policies are broader than others.) 

According to actuarial firm Milliman, only 18.5% of homes in the path of Ian were insured in the National Flood Insurance Program. (Possibly others had private flood insurance.) Homes damaged or destroyed by flood or storm surge would not be covered by property insurance if their policies excluded concurrent causation by an excluded peril. 

Policyholders who sue probably will not succeed in getting coverage, based on previous court decisions. Randy Maniloff of White and Williams LLP has two articles on the website - "ISO's Flood Exclusion Amendments and Hurricane Ian Claims" and "Hurricane Ian: Discussing Wind-Water Disputes" - explaining the issues.

In states such as Florida it's best to assume that hurricanes are a possibility and purchase both property and flood insurance. Until the insurance industry finds a way to cover flood on property policies, this is the only solution that makes sense.