Preparing for Hurricane Irma: Insurance May Help Weather the Storm
Types of Weather-Related Losses for Which Insurance May Be Available
Different businesses are affected differently by the same storm, and even the same physical damage. For instance, a physical loss to a part supplier caused by flooding or a lost roof might impact that business as a physical property loss and as a consequential loss of business income. That same event might also indirectly impact a product manufacturer that relies on the part supplier for components to its product. Likewise, the event might also affect a supplier of raw materials used by the part supplier, since the parts supplier’s need for raw materials will be diminished during the time it takes to repair the physical damage. Companies supplying transportation, logistics and other essential support services also might be impacted, even though none has suffered physical damage.
Insurance is a resource to pay for these losses. Today’s commercial property policies often contain a number of specialized coverages. Depending on the facts of the loss, one or more of those coverages may apply:
The precise terms of the insurance policy and applicable law govern the existence and extent of coverage. In addition, policies are often endorsed or contain exclusions that may expand or reduce coverage. Some applicable limitations on policies include sublimits on certain losses that limit the total available insurance for a particular type of damage, exclusions for flood or water damage, earth movement exclusions, government action exclusions that may not permit recovery for interruptions in business where government authorities limit access, etc. The burden is always upon the carrier to prove the terms and applicability of any exclusion of coverage in a policy. Exclusions are read narrowly and, where found to be ambiguous or not sufficiently notorious in the policy, they will be disregarded or construed in the light most favorable to the insured and in favor of coverage.
Policyholders are always best served by a careful analysis of the terms of their policies and the controlling law governing their insurer’s obligations, as well as a precise documentation and presentation of their loss during the claim process.
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Hunton & Williams LLP’s insurance recovery lawyers assist policyholders secure the full benefits to which they are entitled in the event of any type of loss, including amounts spent to defend or settle large-scale litigation. For more information, please contact the members of the firm’s insurance coverage practice group.
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