Chip Merlin | Property Insurance Coverage Law Blog | June 30, 2019
The Tampa Bay Times ran an excellent story, Hurricane Michael Destroyed Their Homes Then The Insurance Heartache Began, which tells a sad but familiar theme about insurance company denials and delayed payments following hurricane losses. I was quoted in the piece:
Chip Merlin, a Tampa insurance lawyer, said the same conflict happened in the last 15 years after Hurricane Katrina and Hurricane Ike. He said companies try to avoid making payment even when a slab is all that’s left of a property, as is the case in much of Mexico Beach.
‘Typically you have the strongest wind speeds come first, and then the storm surge follows it,’ Merlin said. Both cause damage. But residents and their attorneys, he said, may need to pay meteorologists and engineers to prove that flood and wind are to blame, and how much.
Over a decade ago, I warned that exactly what has happened in Hurricane Michael was going to repeat in, Are We Doomed To Repeat This Again?
I truly think that by raising the National Flood Insurance limits to at least $600,000 for residential structures and $1,500,000 for commercial structures on a replacement cost basis, increase the Law and Ordinance coverage to $100,000 for each, and add co-insurance requirements to the limits available, many of these cases will go away and the National Flood Program will be more sound from a actuarial standpoint because it will be able to insure to value. I suggested something similar to this in a post, Is One Practical Answer to Many Coverage Disputes Involving Storm Surge Versus Wind to Raise National Flood Limits and Underwrite Insurance to Value Properly?
From an educational standpoint about the current limits of the National Flood Program, please remember that the current limits available for purchase are $250,000 for a residential structure at replacement cost and $500,000 for a commercial structure, but only on an actual cash value basis. Neither limit has been raised in years to keep pace with inflation.
There is a huge need to increase the limits for a number of reasons. There is also a strong public policy in a free market economy to encourage the development of a private flood insurance market.