1. Hurricane Matthew Insurance Issues
Legal Aid of North Carolina
Disaster Legal Services CLE
5 December 2016
L. D. Simmons
McGuireWoods LLP

2. Introduction What types of policies apply?
Principles of causation in North Carolina
Filing the proof of loss

3. Standard HO Policies HO-3 Most common form
“All risk” coverage for the dwelling
Defined as: “All risks of physical loss to property”
“Named peril” coverage for personal property
ALE (additional living expenses) covered
Typically 20% of the insured value of the home

4. Key Exclusions Standard HO and renter’s policies exclude flood damage
Most homeowners policies cover windstorm damage
Many carriers do not offer windstorm coverage
So – we have issues . . .

5. Windstorm Coverage
If windstorm coverage is not available, the homeowner may have coverage under either:
North Carolina Joint Underwriting Association – the “FAIR Plan”
Offers both wind and standard HO coverages or
The Coastal Property Insurance Pool – formerly the “Beach Plan
CPIP policies insure only windstorm damage – the insured must purchase a standard HO policy for other losses, e.g., fire

6. Flood Coverage
Because flood is excluded homeowners must purchase flood insurance
Homes in high-risk areas with federally regulated mortgages must purchase flood insurance
Options: private or federally funded insurance
National Flood Insurance Program
Policies insure against “direct physical loss from flood”
Flood is defined as:
Overflow of inland or tidal waters
Unusual and rapid accumulation of surface water
Mudflow
Collapse of land along the shore of a lake or other body of water as a result of water exceeding anticipated cyclical levels

7. Flood Coverage Covers buildings, personal property and debris removal
Home is covered at ACV or replacement costs, if purchased
Limits are 80% of replacement cost up to $250,000
Contents covered only at ACV
No ALE coverage
Exclusions:
Basements
Decks, pools, walkways
Trees and shrubs

8. Available Coverages
Insurers could have more than one policy that applies to a Hurricane Matthew loss:
Standard HO policy
Flood insurance
Private or through the NFIP
Windstorm insurance
Private, FAIR Plan or CPIP

9. READ THE POLICY!!!

10. Causation Issues
The insurers may contend that all or part of the loss is excluded. E.g., the applicable policies cover windstorm but exclude flood
North Carolina courts follow the concurrent causation rule
If a covered and an excluded loss combine to cause the damage, the loss is covered State Capital Ins. Co. v. Nationwide Mut. Ins. Co. (N.C. 1986)

11. Anti-Concurrent Causation Exclusions
Most property policies contain an anti-concurrent causation exclusions:
The Policy excludes loss or damage caused directly or indirectly by any of the following [exclusions]. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss
Builders Mutual v. Glasscar Props. (N.C. App 2010)
Enforced anti-concurrent causation clause in mold case
Southern Ins. Co. of Virginia v. Advanced Coatings, Inc. (W.D.N.C. 2009)
Judge Mullen declined to enforce exclusion

12. Proof of Loss
All homeowners policies require the insured to submit a proof of loss
A proof of loss verifies the amount of the loss
FEMA deadline – 60 days from loss
Extended now to 120 days
Understand the proof of loss requirements and the deadline

13. Hurricane Matthew Insurance Issues
Legal Aid of North Carolina
Disaster Legal Services CLE
5 December 2016
L. D. Simmons
McGuireWoods LLP