Hurricane Insurance vs. Flood Insurance

In the aftermath of a hurricane, commercial policyholders will begin to assess all the damage to the property to begin the process of filing an insurance claim. When it comes to hurricane-related property damage, there are distinct discrepancies between what is covered by hurricane insurance and what is covered under flood insurance. Knowing the differences between the two can help property owners better understand their policies, so they can get back to business more quickly.

The Differences Between Hurricane Insurance and Flood Insurance 

For those who own property in Texas along the Gulf Coast and in other coastal areas, the potential threat of a hurricane is nothing new. Because of this, many understand the importance of having adequate insurance coverage in place well before a storm hits. Hurricanes can cause devastating damage to homes and businesses due to high winds and heavy rains. While many assume all damage sustained in a hurricane can be covered under one policy, this is not always the case. What is covered under hurricane insurance is quite different from what is covered under flood insurance. Understanding these differences can help policyholders best protect their property and livelihoods.

Hurricane Insurance

In Texas and other coastal states, a standard commercial property policy usually will not cover hurricane damage. Rather, hurricane damage coverage is obtained through supplemental coverage for windstorm damage. A hurricane’s high winds can cause damage to a commercial property’s roof, windows, outdoor structures, and more – making it important to have coverage in place for wind-related damage.

Insurance for wind and hail damage is a special type of property insurance that covers damage caused by wind or hail. These policies typically cover physical damage to property as well as personal belongings. In addition, some insurers impose separate hurricane, named storm, and/or windstorm deductibles on commercial policies.

Flood Insurance 

Despite having windstorm insurance in place, policyholders still may not be fully insured for the complete scope of hurricane damage. This is where flood insurance comes in. Just like with windstorm insurance, flood damage is typically not covered under standard commercial property policies. Instead, to cover flood damage, insureds must purchase flood insurance through the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) or the private market.

• The National Flood Insurance Program: The NFIP is designed so that floodplain management and flood insurance complement and reinforce one another. Under the NFIP, a flood is defined as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties.
• Private Flood Insurance: Private flood insurance is available through various private insurance companies rather than the federal government. In certain cases, commercial property owners will obtain private flood insurance over the NFIP due to the NFIP’s coverage being capped at $250,000. 

Generally, whether purchased through the NFIP or the private market, flood insurance will cover water damage caused by the following: 

• Overflow of inland or tidal waters;
• Unusual and rapid accumulation or runoff of surface waters from any source;
• Mudflow; and
• Collapse or subsidence of land along a shoreline, lake, or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood.

Commercial Hurricane Insurance Claims 

Hurricanes are massive storms that can wreak havoc on people and property. When these events happen, it’s important commercial policyholders know how to navigate the insurance claims process.

After a hurricane, one of the most important things a commercial policyholder should do is walk through and document any damage sustained. This should be done through photos, videos, and notes about what was damaged and the type of damage sustained. Ideally, business owners will already have an inventory of all the items within the property that could sustain damage. Having this documentation organized not only helps the property owner remember what should be accounted for but also ensures all damaged contents are included as part of the claim.

Once all the damage has been documented, policyholders can file a claim with their insurer. The insurer will likely request documentation about the type and extent of the damage present. Already having this information at hand can help move the claims process along much more quickly.

Once the claim has been filed and all requested documentation has been submitted, the insurance company may send an adjuster to review the damage and present their findings to the insurer. Because the claims process often involves many steps and procedures, policyholders may feel like it’s normal for the process to take a very long time. However, in Texas,  the Texas Prompt Payment of Claims Act (TPPCA) requires insurers to acknowledge the receipt of the claim, begin an investigation of the claim, and request from the policyholder all documentation necessary to secure final proof of loss within 15 days. The insurer will then have another 15 days to notify the policyholder whether the claim has been accepted or denied. If the carrier is unable to accept or reject the claim within this timeframe, it must notify the claimant and provide the reasoning for needing more time. 

The time constraints laid out in the TPPCA are incredibly important because one of the tactics used by insurers to thwart the claims process is to unreasonably delay valid claims. While the TPPCA does act as a deterrent for some bad faith practices, insurers will often disregard these regulations for their financial benefit. When this happens, policyholders should consult with an experienced hurricane insurance coverage attorney.

Hurricane Insurance Coverage Attorneys 

At Raizner Law, we know just how devastating hurricanes can be for commercial property owners. Not only that, but once a valid hurricane damage claim has been filed, it can still be delayed, underpaid, or denied by an insurance company. Our attorneys understand the ins and outs of these bad faith practices and have handled claims against some of the largest companies in the world to hold them accountable for their actions. If you or someone you know has suffered commercial property damage caused by a hurricane and the claim was delayed, underpaid, or denied, contact our office today to see how we can help.