Almost a month to the day after the now-infamous January 4, 2018 “bomb cyclone”, another “bomb cyclone” (Quinn) hit the East Coast. On March 2, 2018, a monster storm slammed into the New England states causing major coastal damage, including erosion and flooding, as well as massive power outages.
Unlike the
January “bomb cyclone,” which brought heavy snow, Quinn brought rain and high winds
– but very little of the white stuff. However, if that was not enough, less
than 72 hours after Quinn, another monster Nor’easter slammed into the already
vulnerable East Coast dropping wet, heavy snow which further damaged power
lines, brought down huge trees, and caused all sorts of damage.
Just like the
first bomb cyclone, numerous coverage issues may arise from the damage arising
from Quinn.
First, over
900,000 homes and businesses lost power due the second “bomb cyclone,” and hundreds
of thousands more lost power due the subsequent Nor’easter. For most, these
power outages lasted for only 24-48 hours; however, some of the outages were of
a longer duration. Thus, depending upon policy language, “service interruption”
coverage may be triggered for outages of more than 72 hours.
Second, the number of occurrences could
be a significant issue in some instances. This issue can affect both the limits
available for a particular loss and the deductible(s) which an insured must
absorb. For example, in Newmont Mines
Ltd. v. Hanover Ins. Co., 784 F.2d 127 (2d Cir. 1986), insurers
unsuccessfully argued that since two collapses separated by a number of days
were caused by the same condition – excessive snow accumulation – both
collapses should constitute one occurrence. The Second Circuit disagreed with
the insurers, affirming a jury’s two-occurrence finding because in part the
definition of “collapse” in the policies was “strong evidence that the parties
considered each collapse to be an independent event or occurrence.” Thus, the
specific wording of the policy at issue – particularly the definitions of
“occurrence” and “collapse” – is likely
to play an important role in such cases.
Given the result
in Newmont Mines, multiple-occurrence
outcomes are a possibility in cases involving both multiple collapses at the
same property and/or multiple collapses at different covered properties. A
finding of multiple occurrences may also result in cases where there are
multiple snowstorms that cause damage.
It is important to remember, however, that cases addressing the number
of occurrences are extremely fact-sensitive, and it is difficult to articulate
a hard-and-fast rule of general application.
Source: Boston.com
Third, due to the proximity of the two March
storms, which followed closely on the heels of the first Bomb Cyclone, it may
be difficult to identify when property damage actually occurred and whether
there was overlap between the storms. Thus, a threshold question to consider
when adjusting “Bomb Cyclone” claims is whether there has been damage during
the policy period. Because damage from winter
storms often does not manifest until weeks or months after the actual event
that caused them, this question can be a difficult one to determine. Although
damage caused by wind and falling objects (e,g.,
tree limbs) from a winter storm can normally be connected to the dates of the
storm, damage from ice dams, water damage from burst pipes and collapsed roofs
occurs over a much longer period of time. For example, ice dams are caused when
snow from a winter storm melts and then refreezes again. Further, collapsed
roofs are caused by excessive weight from snow and ice oftentimes occurring
from snow accumulation over multiple winter storms.
In light of the rapid
succession of devastating East Coast storms, it is critical to determine
whether any damage being claimed by the insured occurred after the policy
period ended. Much can be learned from 2015’s Blizzard Juno. Following that storm, in 2016, multiple winter
storms hit the Southeast including Georgia, North Carolina, South Carolina, and
Tennessee, including CAT 64 ( February 16 and 17) and then the tail end of
another storm front, CAT 68, hit on February 16 through 22, which affected many
of those same states.
No matter how
many storms are thrown at New Englanders, they try to take them in stride and
think: “hey, chill out, summer is almost here.”
Posted by Seth Jackson
