By Jeff Dunsavage, Head of Research Publications and Insights, Triple-I
Hurricane Lala’s mix of wind, flood, water intrusion and ground movement in Hawaii could require insurers to examine multiple policies for a single loss, according to Richard Folkman, vice president of CAT operations and flood and carrier practice leader at Crawford & Company.
Lala passed south of the Big Island on Aug. 15 without making landfall but left widespread wind and flood damage across the Hawaiian Islands, prompting an extended recovery effort. The storm’s combination of perils within hours of each other makes it difficult to assign a single cause of loss, complicating how claims get evaluated.
“The biggest challenge is separating the different causes of damage,” Folkman told Insurance Business. “In a multi-peril event, you may have wind, rain, flood, debris movement and ground movement affecting the same property within hours of each other.”
The overlapping causes of damage could make early policy identification, insurer notification and claims documentation particularly important. In some cases, the same property could sustain damage that falls across separate policies, endorsements or exclusions. Commercial insureds may face an additional layer of complexity where property damage also triggers business interruption, equipment breakdown or utility interruption claims.
Adjusters must document water lines, debris patterns, roof damage and terrain before determining whether wind, flood or ground movement caused specific damage, rather than assuming one cause upfront.
“That’s why it’s important not to look at the property as simply a hurricane claim,” Folkman said. “The hurricane is the event, but there are several different causes of loss within that event, and the applicable coverage depends on the actual property damage.”
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