United States: Hurricane Irma Losses - Important Insurance Coverage Considerations

Last Updated: September 13 2017
Article by William J. Simonitsch and John R. Hardin

Hurricane Irma is on its way. It is expected to impact northern Puerto Rico Wednesday afternoon, and to make landfall somewhere in the southern continental United States later this week. It is already being called the most powerful recorded Atlantic hurricane, with top sustained wind speeds of 185 miles per hour. While Hurricane Harvey brought unprecedented rain and flooding, Irma is expected to bring unprecedented wind-borne destruction.

Now is the time to evaluate and understand the existing policies, including any excess-layer policies, to maximize an insurance recovery in the event your business makes a claim. Irma will give rise to a variety of individualized issues, which will vary depending on each insured's particular circumstances. But here is a general overview of select issues you should consider.

The Company May Be Impacted by Different "Perils"; Does It Have Coverage?

While businesses may think of Hurricane Irma as a single event, insurance companies think of it in component parts or perils (rain, flood, wind, etc.), and your policy may cover some perils, but not others, even though they all result from the same storm. For example, under a commercial all-risk policy, flood damage is typically excluded. Windstorm coverage (coverage for hurricane and tornado damage) may be included in a commercial all-risk policy in some parts of the country, but is typically excluded in a coastal state like Florida, unless added as an endorsement. You should review each policy in effect to determine if it provides coverage and the different deductibles or sublimits that apply to the various perils.

The Company May Be Damaged in a Variety of Ways; Does It Have Coverage?

Insurance coverage can take many different forms because companies suffer losses from natural disasters in a variety of ways. The total damage your company suffers from Irma may be in forms other than simple property damage, and insurance companies exclude or include many types of damages on a policy-by-policy basis. Gather the declarations pages (the front page or two of a policy) for your company's various insurance policies and any endorsements or riders (which amend the policies). Review the applicable exclusions, deductibles, coverage limits, and sub-limits in the context of your business, and determine whether it has the following coverages:

Property Damage.

Commercial property insurance typically provides coverage for loss or damage to real property (i.e., damage to a building) and personal property (i.e., damage to equipment). Polices often define "insured property" broadly, and it may include coverage for furniture and fixtures, machinery, newly acquired or constructed property, or property of third parties in your company's care, custody, or control.

Business Interruption.

Business interruption coverage can compensate your company for lost revenue or earnings resulting from property damage caused by an insured peril. For example, let's say Hurricane Irma hits Miami, damaging your company's Latin American distribution center. Standard property insurance may cover the physical damage, but it will not cover any revenue lost from a temporary interruption in business. Business interruption coverage may compensate for such lost income, so long as damage to your insured property is the cause of the loss.

Contingent Business Interruption.

Contingent business interruption provides coverage for losses your business suffers when its customers, suppliers, or other business partners incur covered physical damage that renders them unable to conduct normal business operations. This coverage may be available even when your business did not suffer physical damage.

Extra Expense.

Extra expense coverage may apply to pay for your company's costs beyond normal operating expenses when they are necessary to continue operations during a repair period. For example, if your distribution center is damaged and is unusable, extra expense coverage may apply to the cost of leasing temporary warehouse space, relocating inventory, and setting up communication systems.

Actions of Civil Authority.

If an order of civil or military authorities prevents or limits access to your company's property, civil authority coverage may apply to recoup the resulting lost income and extra expenses. For example, if your business can operate, but loses income because the mayor shuts off access to the area except for emergency relief efforts, civil authority coverage may apply. Similar to contingent business interruption coverage, civil authority coverage may apply even when there is no damage to your company's property. But some policies may require that there be damage to the property of others surrounding the insured premises, while other policies may provide broader coverage for mandatory evacuations, curfews, or airport closures.

Lack of Access to Insured Premises.

Ingress and egress coverage is similar to civil authority coverage and may provide coverage for economic losses sustained when access to your company's premises is blocked by a covered peril.

Service Interruption.

Service interruption coverage applies to losses due to the lack of incoming utilities, such as water and electricity.

Claim Preparation.

Claim preparation coverage generally provides coverage for the costs associated with compiling and certifying a claim, which itself can be an expensive and time-consuming process.

Advance Payments.

Businesses often cannot afford a protracted adjustment period. Many policies expressly require that insurers pay losses as incurred while the full extent of the loss is still being adjusted.

Flood Insurance.

Many companies have flood insurance that provides coverage for damage directly caused by flooding. Flood coverage may be included in a private insurance policy or through the National Flood Insurance Program.

Do You Know the Requirements for Presenting a Claim?

Most policies identify specific procedures to be followed in presenting a claim, and some of these procedures may have timing deadlines associated with them. If your company does not comply with these procedures, the insurance company may attempt to deny the claims on that basis.

Understand how and when a claim should be presented under your company's policies (for example, as a flood, service interruption, or civil authority claim). This can sometimes impact the ultimate recovery, particularly in the context of limits of liability and deductibles, which may be expressed to be "per occurrence" or "per loss." It can be very difficult to focus on learning these requirements after you and your company are in crisis mode.

Where policies have specific exclusions applicable to certain perils or circumstances, it is important that your company takes these into account when presenting its claims. For example, if the wind tears a hole in the roof of your company's facility and several inches of rain fill it, your claim may be denied if you characterize this as "flood damage" under a property insurance policy that excludes flood damage. Presenting the claim as a properly characterized one for wind-driven rain damage increases the likelihood of a quick and complete insurance recovery.

In all cases, have the policies and relevant records secured and accessible at a location or in a way that will not be impacted if Hurricane Irma strikes.

What Are Some Common Insurer Responses to a Large Claim?

Hurricane Irma has the potential to give rise to billions of dollars of insurance claims. Insurers may raise a number of potential limitations or restrictions on coverage for your company's claims. Here are just a few common issues raised by insurers, particularly when faced with large claims:

The damage was not caused by an insured peril.

Hurricane damage is frequently the result of concurrent covered and noncovered perils. For example, a facility may be damaged by flood, wind, and rain. State laws vary and causation issues can be, and often are, nuanced and complex. Insurers will often deny a claim arguing that the primary cause of the damage was uncovered. The insurer may deny a claim as uncovered flood damage, denying that the damage was caused by a covered rain peril. Or the insurer may deny a claim arguing that the wind would not have created an opening in your warehouse's roof allowing covered rain damage if it were not for an uncovered construction defect.

There was no covered business interruption.

Insurers will often take a very narrow view of what constitutes a business interruption, sometimes arguing that a complete cessation of operations is necessary to support a claim. The insurer may also dispute the necessity of the interruption. For example, the insurer may argue that at least some part of the interruption or reduction in your company's business was the result of an unrelated business decision by the company, or the consequence of an economic downturn, and it was not caused solely by damage to insured property.

The claim is for losses beyond the allowed recovery period.

Policies sometime include provisions specifying that it only covers loss of income and related expenses for a specified period of time after an insured event occurs. If the policy does not define that period, it may be tied to the time it would take your company, employing reasonable mitigation efforts, to resume normal business operations under the circumstances. In view of the magnitude of some natural disasters and the number of businesses affected, the length of time it will take to repair property and resume normal business operations may be longer than had the claim been from an isolated event affecting a single facility.

The claim is subject to a per-occurrence deductible.

Many policies have a per-occurrence deductible or other self-insurance features that may reduce the amount of coverage available, depending on how the number of occurrences issue is addressed. This issue can also impact the amount of per-occurrence policy limits that may be available to your company.

Evaluating and Challenging Insurer Positions

The validity of any defenses or limitations to coverage raised by insurers may vary depending on the law governing the policy. Moreover, the applicability of defenses as to liability or valuation depends to a great extent on specific language used in the policy and the applicable law. Experienced insurance coverage counsel is often needed to assess the viability and strength of a policyholder's claim, in dealing with the insurers' loss adjusters, and in maximizing the policyholder's potential insurance recovery.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions