Storm Surge, Wind, and Two Policies on the Same Coastal Home
The Breslins own a coastal New Jersey home insured on an HO-3 with Coverage A of $400,000, a 2% hurricane deductible, and a $2,500 all-other-perils deductible. They also have an NFIP flood policy with $250,000 building coverage, $100,000 contents coverage, and a $2,000 deductible. Hurricane Dana brings wind gusts of 85 mph and a storm surge. The roof loses shingles and the wind-driven rain enters the attic; the surge then floods the first floor to a depth of 18 inches. The contractor separates the damage as follows: roof shingles $18,000; siding $22,000; attic insulation and drywall $14,000; first-floor drywall, flooring, and cabinetry $90,000; contents $30,000; mold remediation $15,000. The Breslins did not move furniture upstairs before the storm and have no receipts for some contents. The HO-3 contains an anti-concurrent causation clause. The adjuster must coordinate two claims and explain the deductible to the insured.
1. Allocate the damage between the HO-3 and the NFIP policy, and explain how the hurricane deductible and the anti-concurrent causation clause affect the HO-3 payment.
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Start with cause. The HO-3 covers wind and wind-driven rain, but excludes flood, including storm surge. The NFIP policy covers the flood, but not wind. The contractor's separation is the starting point: roof shingles $18,000, siding $22,000, and attic insulation and drywall $14,000 are wind-related; the first-floor $90,000, contents $30,000, and mold $15,000 are flood-related unless the investigation shows otherwise.
HO-3 payment. The wind portion is $54,000 before deductible. The 2% hurricane deductible is 2% of $400,000, or $8,000. That leaves about $46,000 for the wind damage, subject to the anti-concurrent causation clause. That clause may exclude wind damage if wind and flood acted concurrently and the damage cannot be separated. The adjuster must determine whether the roof and siding damage occurred before the surge and whether the attic damage came from wind-driven rain rather than flood. If the causes cannot be separated, the HO-3 may deny part or all of the claim; state law on anti-concurrent causation must be checked.
NFIP payment. The flood building damage is $90,000, within the $250,000 building limit, and contents are $30,000, within the $100,000 contents limit. The NFIP $2,000 deductible applies to the flood claim. Mold may be covered by NFIP if it resulted from the flood, but the adjuster needs the remediation report. The insured should not be paid twice for the same damage.
2. What would you tell the Breslins about the mold remediation and the unreceipted contents, and what documentation would you request for the NFIP contents claim?
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Mold. The HO-3 generally excludes mold unless it results from a covered peril and then only up to the mold sublimit. The NFIP may cover mold remediation if the mold resulted from the flood, but the adjuster must separate flood-caused mold from mold caused by wind-driven rain or by the insured's failure to mitigate. The $15,000 estimate should be broken down by area and cause. Tell the Breslins that mold coverage is not automatic under either policy and that the contractor's causation report is essential.
Unreceipted contents. The NFIP requires proof of loss and documentation. The Breslins should provide photographs or video before and after the loss, credit card or bank statements, replacement estimates, and a room-by-room inventory. The adjuster may accept a sworn statement and other evidence, but unreceipted items are more likely to be valued at actual cash value and may be reduced or denied if ownership or pre-loss condition cannot be shown. The Breslins should not discard damaged items until the adjuster has inspected or documented them. Explain that the NFIP proof of loss must be completed within the required timeframe and that the $2,000 deductible and policy limits apply.