Common Commercial Hurricane Damage Claim Disputes in Texas
Insurance companies are experienced at contesting certain types of claims that result from hurricanes and large storms. With Super Storm Sandy leaving $50 billion in damage, according to an estimate by Moody’s, rebuilding damage in the wake of a devastating storm is on many people’s minds. The reason an insurance company may deny or underpay on a claim is varied and depends on the type of insurance coverage, the provisions in the coverage and the integrity of the insurance company.
Type of Water Damage
Water can damage the interior of a commercial space in a hurricane or storm in any number of ways. However, many insurance policies only cover water damage when the damage came from wind. A commercial property must purchase separate flood and windstorm coverage. Unfortunately, this can be difficult to obtain in some parts of Texas due to the frequent occurrence of hurricanes.
When the damage is a combination from wind damage and flood or surge damage, the insured is only covered for the wind damage. It is up to the insured to provide evidence on what damages to the building are covered, and what is not.
Wind Deductible and Coinsurance
Simply proving wind damage is not necessarily the end of the story. Deductibles for wind damage can be a large source of contention between the claimant and the insurance company. Deductibles can be either a flat rate or a portion of the overall damage to the property, a certain building or the entire policy. In some extreme cases, a deductible can cost more than the coverage for wind damage, rendering the policy effectively useless.
Coinsurance disputes arise if an insurance company believes the policyholder underinsured the property. A coinsurance clause requires a policyholder to maintain insurance equal to its value. Disputes can arise as to the actual value of the property and whether a coinsurance clause applies.
In addition to commonly contested provisions in an insurance claim, litigation can arise out of bad faith on the part of the insurance company. Bad faith occurs when an insurance company:
- Delays payment or fails to investigate a claim in a reasonable amount of time
- Underpays on the claim
- Denies coverage by unreasonably interpreting coverage
- Demands unreasonable or arbitrary proof of loss
- Coerces a policyholder to settle a claim
A successful claim against an insurance company for acting in bad faith can get damages for the underlying claim as well as punitive damages in certain specific situations.
An Insurance Attorney Can Help
When flood or water damage occurs, what is and is not covered can often be hotly contested. Whether a legitimate dispute arises or an insurance company is not handling a claim in a timely or honest matter, an insurance dispute attorney can help a business or homeowner navigate the insurance claims process and ensure a policyholder’s rights are not violated.