Hurricane Harvey |  Flood vs. Wind and Wind-driven Rain Coverage

After Hurricane Harvey’s catastrophic flood waters recede a familiar coverage issue will arise once again:  the gray area between flood and wind/wind-driven rain damage and how insurance coverages are affected by the distinction.  Although SE Texas and South LA have and will experience primarily flood damage from Harvey, it is important to be aware of the differences between flood and wind/wind-driven rain damage.

The difference is not as simple as using the flood water line to separate flood and wind/driven rain damage.  La. R.S. 22:1893 specifically provides that insurers CANNOT use the floodwater mark on a covered structure without considering other evidence when determining whether a loss is covered under a homeowner (wind) policy.  It is critically important for businesses to consider the distinction because business interruption coverage is typically provided through wind (property) policies and in order to maximize the Period of Restoration (POR) coverage, business owners must be able to properly identify and distinguish wind and wind-driven rain damage vs. flood damage.

Wind/wind-driven rain damage almost always occurs before flood damage and the repair work that must be undertaken during PORs can often be the same or similar regardless of the flood water damage that comes later.  When taking initial steps after storm damage (separating property, listing contents, identifying areas of structural damage) and working with flood and wind/BI adjusters it is critical to identify damage that was likely caused by wind/driven rain.  For example, roof damage, broken windows, water stains in walls and ceilings above the flood water line and points of entry of water above the flood line are examples of evidence of wind/wind-driven (non-flood) damage.  This evidence must be documented before repair/renovation/demolition work begins, otherwise an insured risks losing the evidence supporting this type of coverage claim.

What does this mean as it pertains to Hurricane Harvey and the all too common catastrophic rain events that plague our region?  It is critical for business owners to obtain as much flood insurance as possible.  Business interruption coverage is offered by some flood insurance carriers, typically at significantly increased premiums over basic flood coverage.  Business owners who chose to self-insure for business interruption flood losses can obtain IRS casualty loss tax deductions in the event of disaster-related property damage.              

The team at Jackson & Jackson can assist with all your policy analysis, consultation, claims management and casualty proof of loss preparation of IRS Form 4864 needs.  Contact Konrad Jackson or Dan Dilzell at the firm’s New Orleans office at (504) 525-5090 or visit our website at www.jlaw.net for more information.

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