Tag: Storm Created Opening

Insurance Attorneys

Southeastern Texas Sees Worst Rain Since Harvey

Many Texans were having flashbacks to Hurricane Harvey last week as they surveyed the damage caused by several days of significant rainfall. On June 19th, a slow moving storm drenched Southeastern Texas with the worst rainfall the area has seen since Hurricane Harvey in August 2017.

The slow moving storm was a recipe for disaster. The upper-level low-pressure system stalled over Texas, where it began interacting with widespread tropical moisture, which caused the torrential downpour. The storm dropped large amounts of rain ranging from five inches to 15 inches in some areas. Most of the rainfall fell along the Texas coast from its Southern border to approximately 125 miles south of Houston. The rain also hit the Beaumont-Port Arthur area particularly hard, with some property owners discovering six inches of floodwaters. Many Orange County residents had only recently moved back into their homes after Hurricane Harvey only to suffer flood damage again during this latest bout of storms.

Recovery after a storm like this can take many months. Unfortunately for property owners, dishonest insurance companies are reluctant to uphold their policies, thus slowing repairs down. Many companies use nuances in policies to try to wiggle their way out of paying claims, so it’s important for policyholders to understand some insurance jargon.

Wind Driven Rain vs. Storm Created Openings

There are two types of water damage created by rainfall: wind driven rain and storm created openings. While you might not think there is much of a difference between the two, the reality is that one of these types of damage is covered by insurance and the other is not. A storm created opening occurs when wind or other forces during a storm create an opening rainfall can then fall through. If wind rips off portions of your roof, siding or windows, a building’s interior will quickly become drenched. This type of damage is covered under your insurance policy. Wind driven rain occurs when an existing flaws in the building envelope allow rainwater to enter the interior of a building. This type of damage is not covered under your policy.

The difference between wind driven rain and storm created openings may seem obvious, but many insurance companies will wrongfully classify damage as wind driven rain to avoid paying out. Unfortunately, many policyholders don’t know any better. When an insurance company wrongfully denies claims, policyholders can hold them accountable by filing a lawsuit.

Insurance Attorneys For Southeastern Texas

Raizner Slania LLP is a local law firm that focuses on getting policyholders the most out of their policies. If your insurance company has delayed, underpaid, or denied your property damage claim, call us today to schedule a free consultation and learn your legal options.

Victoria Hurricane Harvey Claim

Victoria Residents Facing Bad Faith Insurance Denials On Harvey Wind Claims

Many Texans are still struggling to rebuild in the aftermath of Hurricane Harvey. For residents in Victoria, Texas, recovery has been very slow. When Harvey ripped through Victoria, it was still a Category 4 hurricane, meaning it caused absolutely catastrophic damage. Victoria’s sluggish recovery is due, in part, to insurance companies operating in bad faith toward policyholders unaware of their rights.

The Complexities of Wind Claims

As a Category 4 hurricane, Harvey caused substantial wind damage across Victoria. Unfortunately, wind damage is usually just the beginning of the damage a building sustains in the aftermath of a large-scale natural disaster. Wind damage often creates openings that allows rain into properties, causing widespread water damage. Many commercial buildings in Victoria had their roofs ripped off, which allowed Harvey’s relentless rainfall to destroy just about everything inside.

Recovering funds for flooded contents might seem like a straightforward insurance claim, but the reality many Victoria business owners are facing is that insurance companies are operating in bad faith to avoid paying out on claims. Natural disasters like Hurricane Harvey leave insurance companies on the hook for billions of dollars in damages. To avoid and/or limit their claims obligations, many insurance companies are using bad faith tactics to wrongfully deny or limit claims.

Storm Created Openings and Wind Driven Rain

A storm like Harvey can cause both exterior and interior damage to commercial buildings. Some insurance policies require a storm created opening for interior damage to be covered, while other policies do not, and it takes an experienced insurance attorney to know the difference. Storm created openings occur when a storm causes an opening in building envelope, including the roof, exterior and windows, and this opening allows rainfall to damage the interior.

By classifying damage as being caused by wind driven rain rather than storm created openings, insurance companies sometimes try to avoid paying for water damage caused by Hurricane Harvey. This isn’t just wrong, its illegal, and Victoria business owners need to understand their rights regarding their commercial insurance policies.

Know Your Rights

Commercial insurance policyholders are protected under the Texas Insurance Code from certain bad faith tactics. Policyholders have a right to a prompt, fair, and equitable settlement of a claim. Insurance companies are required to adopt and implement reasonable standards for the prompt investigation of a claim and cannot refuse a claim without conducting a reasonable investigation. If your insurance company is violating your rights you’re going to need the help of an experienced insurance lawyer.

At Raizner Slania LLP, our insurance lawyers have taken on some of the largest insurers in the country, and won. We know how insurance companies try to dodge responsibility and how to combat this to get our clients what they are rightfully owed under their policies. Contact us today to discuss your Victoria Hurricane Harvey claim during a free consultation.

Wind Driven Rain and Storm Created Openings: How Insurance Companies Are Using Policy Exclusions and Limitations to Deny Harvey Claims

Much of Texas is struggling to rebuild in the aftermath of Hurricane Harvey. Progress has been slow for many property owners because insurance companies are dragging their feet in paying out on claims. Many Texans are discovering their insurance companies are using certain exclusions and limitations in their policies to wrongfully deny legitimate claims. This approach has become common throughout the Coastal Bend area of Texas, as real estate owners and businesses are beginning to receive denial letters from their insurance companies.

Is your insurance company refusing to pay your claim on the grounds that the damage resulted from wear and tear and not wind from Hurricane Harvey? Are they admitting that there is damage to the interior of the building that resulted from wind driven rain, but refusing to pay because there was “no storm created opening”? Let’s take a look at the applicable clauses, and what you can do about it.

All Risks Policies and Wind Driven Rain 

Most policies issued in Texas consider any direct physical loss to be covered unless the loss is either excluded or limited by a specific policy provision. Wind damage from a hurricane and wind driven rain are both considered a covered cause of loss under most insurance policies. Because of that basic rule, insurance companies will have to identify and prove that a specific “Exclusion” or “Limitation” contained in the policy applies before they can avoid coverage.

In Texas, a policyholder bears the responsibility to demonstrate a covered cause of loss, but if an insurance company wants to avoid payment based on an exclusion or limitation, they have to prove that it applies.

Ensuing Loss and Policy Exclusions For Wear and Tear, Faulty Maintenance, Manufacturing Defects and Other Pre-Existing Conditions

Most policies contain a series of exclusions that are crafted to avoid coverage. One of the most commonly used exclusions pertains to “wear and tear.” If an insurer can demonstrate that roof damage was the result of wear and tear and not hurricane winds, there is no coverage under the policy.

Often, however, these condition-based exclusions are written back in coverage for an “ensuing loss.” An ensuing loss is a new loss that follows an earlier loss. In the case of an ensuing loss, the earlier loss is often uncovered under the policy, while the new loss is, meaning policyholders will only receive compensation for damage caused by the new loss and are left paying out of pocket for damage caused by the original loss.

For Hurricane Harvey claims, this is most commonly playing out like this: insurance companies will claim the roof, siding or other component of the building envelope were not damaged by wind, but rather deteriorated due to wear and tear over time. Then wind driven rain, a covered cause of loss, enters the building through the existing defects and causes interior water damage. The alleged original loss – the deteriorated roof – is not covered under the policy, so insurance companies do not have to pay for the water and wind damage caused by the storm. The interior water damage is covered under the policy, so insurance companies will compensate policyholder only for this damage.

When an insurance company denies damage to a roof, but pays for interior damage due to water or wind driven rain, it is typically a result of an ensuing loss type of provision.

Even in a circumstance where an insurer pays for interior damage due to ensuing loss, they will try to minimize those payments. The interior of a building includes anything beneath the roof covering, such as insulation and decking. When an insurer has a responsibility to pay for interior damage under a policy, they are obligated to pay for all interior damage, and not just limited payments for sheetrock. This includes substantial repairs for the parts of the building just below the roof, such as wet insulation or corroded decking.

Storm Created Opening Limitations

In addition to outright exclusions, an all risks policy may also contain certain “Limitations.” One common limitation provides that the insurer will not pay for damage to the interior of a building unless “the building or structure first sustains damage from a Covered Cause of Loss to its roof or walls through which the rain . . . enters.” In other words, with this type of limitation, there is no coverage for interior damage unless it resulted from a storm created opening. Many policies do not contain this type of limitation, and in those cases, interior damage is covered even without evidence of wind damage to the roof, siding or windows.

How Insurance Companies Are Abusing Wind Driven Rain Clauses

In the aftermath of Hurricane Harvey, insurance companies are facing the financial liability for billions of dollars in claims. Insurance companies are run first and foremost as businesses. This means insurance companies may not always have a policyholder’s best interests at heart. In order to avoid paying out on claims, many insurance companies are wrongfully claiming damages were caused by wear and tear, and not a covered loss such as wind driven rain.

While this might seem like a small detail, the reality is that this can determine if a claim is paid or not. Many policyholders in places like Fort Bend County, Rockport, and all along the Texas coast are shocked to find out insurance companies wrongfully classify their wind damage.

Hurricane Harvey was a Category 4 hurricane with maximum sustained winds at 130 miles per hour. Wind damage from Hurricane Harvey was obvious. Roofs were destroyed, trees were downed, and properties were decimated. So why do insurance companies fraudulently deny these claims?

Very few policyholders understand the nuances and complexities of commercial insurance and are unaware of their rights. By giving policyholders the runaround, companies are saving themselves millions of dollars in payouts. This is wrong and insurance companies must be held responsible.

Raizner Slania LLP Helps Policyholders With Hurricane Harvey Wind Claims

If you regularly pay your premiums, you are entitled to full coverage under your insurance company. If your insurance company has wrongfully denied, delayed, or underpaid your claim, call the experienced Hurricane Harvey wind claim lawyers at Raizner Slania LLP today. We have a successful track record of taking on some of the largest insurers in the country. Don’t wait to get help on your Hurricane Harvey claim.

hurricane harvey insurance lawsuit

Raizner Slania Files Hurricane Harvey Insurance Lawsuit On Behalf Of Ingleside Hotel Owner

Raizner Slania has filed what appears to be the first Hurricane Harvey wind damage lawsuit within the federal court system. The plaintiff is an Ingleside, Texas hotel owner and the case was brought against Certain Underwriters at Lloyd’s London.

The affected property is a brand new hotel whose construction was completed in March 2017. The hotel consisted of three stories with a total of 72 individual hotel rooms. With an investment of over $6 million to construct the property, the Texas owner intended to own and operate the hotel for many years to come.

Surplus Lines Insurers in Texas

Underwriters at Lloyd’s London operate as the most prolific surplus lines commercial insurer in the State of Texas – by a sizeable margin. In 2017, all surplus lines insurers operating in Texas wrote a combined $5.5 billion in premiums. Of that, $1.5 billion was written by Underwriters at Lloyd’s London, with the next largest entity writing approximately $250 million in premiums.

Although Lloyd’s has a considerable presence in Texas, the company is actually only licensed to sell insurance in Illinois, Kentucky, and the U.S. Virgin Islands. In order to operate in Texas and other states, Lloyd’s operates as an unlicensed surplus lines insurer. Because it operates as a surplus lines insurer, Lloyd’s is not subject to traditional state regulations, such as those promulgated by the Texas Department of Insurance.

Surplus lines insurance companies are often absentee insurers with few or no employees in Texas. In many ways, they operate as a virtual file cabinet. Lloyd’s of London is comprised of various “syndicates” made up of investors or members that bear unlimited liability for the insurance risks Lloyd’s writes. The syndicate investors are often foreign insurance entities that lack any authority to operate in Texas. Effectively, they borrow Lloyd’s surplus lines authority to operate in this state, and in doing so, they are able to access the lucrative Texas insurance market without any direct licensure or regulation.

Five distinct investors, each of which is a foreign, unlicensed, non-admitted, ineligible entity, underwrote our client’s policy. Their only legal connection to writing insurance in this state comes from essentially piggybacking on Lloyd’s surplus lines eligibility – in other words, borrowing Lloyd’s license in order to operate in Texas.

None of these insurers are licensed to write insurance in Texas and none has a single employee in the entire state. None has complied with any Texas regulatory requirements, and each of these foreign entities is essentially borrowing Lloyd’s eligibility to write insurance in Texas, to the detriment of small business consumers like our client.

Hurricane Harvey and Wind Driven Rain Damage

Our client purchased a commercial insurance policy with Lloyd’s, which was underwritten by five foreign insurers. The policy coverage period was January 23, 2017 through January 20, 2018. On August 25, 2017, the property suffered catastrophic damage as Hurricane Harvey swept across the Texas coastline. Our client’s policy (like many other policies) includes coverage for damage resulting from a “storm created opening” but not from “wind driven rain” that enters the property without coming through a damaged part of the building envelope.

When a storm creates some type opening in a building, it also opens the building up to damage caused by rainfall. This type of damage is covered under most insurance policies. Wind driven rain refers to water damage that enters the property through an existing flaw. This type of damage is usually not covered under commercial insurance policies.

In wake of Hurricane Harvey, many insurers appear to be making the most of the distinction between coverage for “storm created openings” and “wind driven rain” as a loophole through which they would cram almost all of their coverage denials. And as the 800-pound gorilla in the Texas commercial insurance market, Underwriters at Lloyd’s London is leading this type of coverage avoidance and policy misinterpretation.

Our client’s hotel suffered substantial damage from Hurricane Harvey. Sizeable portions of the roof were ripped off by high winds, allowing rain to be driven through the building envelope. In addition, outdoor lights were sheared off their metal anchors and destroyed, signs were torn off their housings and tossed into heaps on the ground, windows were smashed, unsealed, and disengaged from their housings, the interior suffered significant water damage, and the building suffered substantial structural damage. Our client filed an insurance claim with Lloyd’s to cover the cost of repairs to the property

Because neither Lloyd’s nor the five foreign syndicates that comprise the underwriters on the policy have one single employee in Texas, they assigned Engle Martin Claims Administrative Services to handle the claim. Although Texas law provides that an insurer has a “non-delegable duty” to responsibly handle claims, delegating is precisely what foreign insurance entities like Lloyd’s do on a regular basis.

In response to the claim, Engle Martin assigned the claim to an adjuster. According to the Texas Department of Insurance, the adjuster is a Michigan resident who had been a licensed adjuster for a mere two months at the time he was assigned to review the property damage.

Typically, newly licensed or inexperienced adjusters are assigned smaller, residential losses in order to hone their skills and gain experience. But in this instance, Engle Martin assigned a newly minted adjuster to inspect a multi-million-dollar property that had sustained an extensive and complex loss potentially covered by all three coverage parts – building, contents, and business interruption. The adjuster was not up to the task of assessing this claim.

Although neither Lloyd’s nor Engle Martin has to date provided clear documentation of the inspection, the adjuster purportedly visited the property on August 31, 2017. According to Engle Martin, the adjuster observed “minor” damage to the building exterior, “minor” damage to “some shingles” on the roof, downed lights, signs, gutters, and fences. The adjuster also purportedly observed “significant” water damage to the interior of the building. However, according to Engle Martin, its adjuster did not observe “exterior storm related damage which would have allowed the observed interior water to enter into the affected areas.” It is unclear at this time whether Engle Martin and the adjuster prepared an estimate reflecting these outlandish findings because one was never provided to our client, as it should have been.

Additionally, Engle Martin engaged SEA, Limited and one of its engineers to further assess the property. Sticking with the party line, on September 20, 2017 SEA opined the interior water damage did not result from wind damage, but instead resulted from wind driven rain passing into the Package Terminal Air Conditioning (PTAC) units on the exterior walls. SEA further opined water entered the building through joints in the exterior finish or flaws in sealant.

In other words, despite clear photographic evidence of storm created openings in the building envelope – including the roof and stucco exterior – SEA assisted Engle Martin in its efforts to avoid making a claim payment by implicating the “wind driven rain” limitation to the policy’s wind coverage provision. As a result, Lloyd’s has denied paying our client’s insurance claim. To this day, Lloyd’s has refused to pay for any covered damages under the policy.

New Texas Insurance Code § 542A Demand Letter Ignored

Texas lawmakers passed House Bill 1774 into law effective September 1, 2017. The controversial new law contains a number of provisions purportedly designed to protect business consumers. One such provision is a pre-suit notice and demand requirement designed to encourage early resolution. The plaintiff complied with this new provision; but, Lloyd’s of London ignored the pre-suit demand and did not respond to it.

Lloyd’s Violated The Texas Insurance Code 

Our client alleges Lloyd’s violated numerous provisions of the Texas Insurance Code, including failure to effectuate a prompt, fair, and equitable settlement of a claim and failure to adopt and implement reasonable standards for the investigation of a claim. Our client also believes Lloyd’s misrepresented the policy under which it affords coverage. Additionally, our client believes Lloyd’s violated the Deceptive Trade Practices-Consumer Protection Act.

Fighting For Policyholders After Hurricane Harvey

After Hurricane Harvey, some unscrupulous insurance companies appear to be willing to do anything to avoid paying out claims. Because surplus lines insurers operate in a gray area of the market, many get away with ripping off policyholders. Raizner Slania LLP has a successful track record of standing up to some of the largest insurance companies in the world, including Lloyd’s of London, and winning. If your insurance company isn’t being straight with you regarding your Hurricane Harvey claim, we can help. Call us today for a free consultation to discuss your case.