Harvey. Irma. Jose. Maria. Each week over the past few months there has been a powerful hurricane menacing the Caribbean and the Southeast destroying everything in its path. Property is damaged as the storms make landfall, and the affected areas are paralyzed both before the storms hit as state and local governments brace for impact with mandatory evacuation orders, and after due to road closures, widespread power outages, and individuals devoting all their time to accounting for family and friends and beginning to rebuild. An integral part of the rebuilding process involves assessing the availability of insurance coverage for property that was damaged and business that was lost.

When it comes to insurance coverage for a hurricane, the most important steps are taken before the storm. When purchasing property insurance, it is important to assess the risk of hurricane damage to your property and have a clear understanding of the coverage that you will have in place in the event of a hurricane. Ask your insurer or broker what the coverage would be should the worst happen. Often, the insurer or broker can be bound by the interpretation of the policy it provided before the storm hits.

Policyholders should also know what to look for when reviewing hurricane coverage. Most commercial property insurance policies are written on an “all-risk” basis, meaning they provide full coverage for all perils and types of property damage unless specifically excluded. However, even where not excluded, the policyholder will have to be cognizant of whether the peril or type of property damage would be subject to a sublimit, i.e., a lesser limit than the full policy limit, as that is a common way that insurers severely limit their exposure. Importantly, those exclusions and limits can be tied to peril definitions in the policy, which can significantly affect the policyholder's recovery for hurricane-related damage. Hurricanes can cause damage through powerful winds, battering rains, or rising water from wind-driven storm surge, and coverage for each part of the hurricane can vary depending on what damage is defined as “Flood,” which is usually excluded or sublimited, and “Windstorm” or “Named Windstorm,” which may have full or additional coverage.