When we think of storms, more specifically “named” windstorms, we likely assume its taking place in coastal or island areas.
In recent years, however, it’s become a fairly common—and unfortunate—practice to name storms, regardless of season or location.
As with Dorothy and Ezekiel in recent weeks, the seemingly benign act of naming a windstorm will change the way your insurance coverage responds to a loss or claim resulting from the storm.
This can have disastrous implications if you aren’t paying close attention to your policy language.
Here’s what you need to know:
- Most policies have endorsements placed within them that define what is, and isn’t covered
- Most policies define if there’s a separate deductible applied to wind/hail events
- Some policies further define whether or not named windstorms are covered or not covered by the contract of insurance
Why is all of this important?
We normally assume that named windstorms are the sole domain of hurricanes or cyclones. Unfortunately, with “Super Storm Sandy” causing major damage to homes and businesses in the upper east coast to the tune of billions in loss, business owners and homeowners alike discovered these exclusions created declinations of coverage to their claims.
It is very important to know what is and isn’t covered by your coverage program, and while this can be a much overlooked area of concern to most companies not operating in coastal environments, it can be something that causes a devastating impact to your company.
Insurance coverage has “triggers” that either provide extension of coverage, or trigger a gap in coverage leading to a declination. In the above exclusion for named windstorm if your policy contains this, any resulting damage, loss of income, etc. could be denied as a claim.
We routinely review forms to ensure our clients are as insulated from risk as possible, and often times the exclusion can be removed at no cost.
Curious about your own company’s coverage? Have questions regarding this discussion? Please don’t hesitate to contact me. There is no cost for me or my team to review your program—and it could save you quite a bit in the long run.