GF591 Unit 6 Wind and Surge Claim Seminar Reflection Example

Wind First, Water Second: A Unit 6 Seminar Reflection on a Coastal Homeowners Claim

[Student Name]

Purdue University Global

GF591: Individual Insurance Planning

Unit 6 Seminar Reflection

[Instructor Name]

[Date]

The house, the policy and the losses are a composite seminar case; classmates are not named; the sources cited are real.

What I Thought Before the Session

The case seemed simple when I read it. The house had a dwelling limit of $480,000. The adjuster's figures put wind damage, mainly the roof and the upper floor it exposed to rain, at $61,000, and storm surge damage on the ground floor at $142,000. My notes said the homeowners policy would pay the wind damage, water was excluded, and the only question was whether the owner had flood insurance. I estimated that the owner would collect $61,000 and carry $142,000, and I thought that was the whole answer.

What the Discussion Added

The first correction came from a classmate who asked about the deductible. Coastal policies often carry a separate hurricane deductible set as a percentage of the dwelling limit. At 5 percent, that deductible was $24,000, and it came off the wind claim first. The homeowner would collect $37,000, only 18.2 percent of a $203,000 loss.

The second point was that the owner had no flood policy at all. Because the federal map placed the house in a moderate-risk area, the mortgage company had not insisted on flood cover, and the owner took the map's label as a forecast.

The third point changed my view most. The instructor asked who decides which damage was caused by wind and which by water when both struck the same walls within a few hours. My split assumed the answer was obvious. The policy's exclusions section begins with language that excludes a listed loss "regardless of any other cause or event contributing concurrently or in any sequence to the loss" (Insurance Services Office, 2010). This is the anti-concurrent causation clause. If water contributed to the damage to a wall, the clause can exclude that damage even if wind also contributed.

The clause moves the fight from how much the house lost to what caused each part of the loss, and two engineers looking at the same ruined wall can reach different answers.

Courts have enforced this clause in hurricane cases. After Hurricane Katrina, a federal appeals court held that a homeowners policy's anti-concurrent causation language excluded damage caused by water even where wind had also played a part, although the insurer still owed for damage caused by wind alone (Leonard v. Nationwide Mutual Insurance Co., 2007). For the owner, that means the $61,000 wind figure is itself open to argument.

Why I Missed It

Looking back, I missed these points because I read the case the way I read most policies: from the declarations page down. The declarations page shows limits and premiums in large type, and it makes coverage look like a single number. The deductible endorsement and the exclusions sit pages later, written in language that is easy to skim. I also assumed that wind and water arrive separately, one after the other, when in a hurricane they work on the same structure together. A classmate who had worked as an independent adjuster said that most of the arguments after a coastal storm are not about the size of the loss at all, but about its cause.

Pricing What Was Missing

I worked out what a flood policy would have done. A National Flood Insurance Program policy on the building, at an illustrative premium of about $1,150 a year with a $2,000 deductible, would have paid about $140,000 of the surge damage, since building coverage under the program reaches $250,000 (Federal Emergency Management Agency, 2020). Combined with the wind claim after the hurricane deductible, the owner would have recovered about $177,000 of the $203,000 loss instead of $37,000. The cost of not buying the flood policy was therefore about $140,000, against roughly $1,150 a year saved.

How My View Changed

I came in reading the policy by its limits and its covered perils. I now think that reading a coastal homeowners form starts with the exclusions and the deductibles, because they decide what the limit is worth. A $480,000 limit sounds like protection, but with a percentage deductible, a causation clause and no flood policy, it delivered less than a fifth of the loss.

What I Will Check First

On any coastal form, I will now read three things before the limits: the hurricane or named storm deductible, the wording at the start of the exclusions section, and whether a separate flood policy exists. I am still unsure how a planner should advise a client outside a mapped flood zone about flood coverage, since the maps clearly did not describe this house's risk, and I would like to know how often surge reaches homes the maps call moderate risk.

References

Federal Emergency Management Agency. (2020). National Flood Insurance Program: Summary of coverage (F-679).

Insurance Services Office. (2010). Homeowners 3: Special form (HO 00 03 05 11).

Leonard v. Nationwide Mutual Insurance Co., 499 F.3d 419 (5th Cir. 2007).