Should We Reclassify the Biggest CATs?

Typhoon Mangkhut, a Category 5 storm that ravaged the Philippines and China earlier this month, got us thinking about just how bad typhoons and hurricanes may become if the predictions of climate scientists continue to be proven accurate.  We’ve all seen the claims that a warmer atmosphere and warmer ocean waters will lead to stronger storms, higher winds, greater storm surge, and more rain and flooding.  Typhoon Mangkhut and Hurricane Florence seem consistent with those predictions, and Mangkhut may even call into question whether a new level of storm classification will be appropriate in the future.

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Hurricane Florence- Fears of Pollution From Flooded Ash Dumps and Hog Farms

The flooding that has accompanied Hurricane Florence raised concerns about pollution from flooded ash dumps and hog farms. With confirmation of at least one failure of an ash dump and the breach of a lagoon holding hog waste, those concerns have become a reality. How this pollution may impact first party property claims remains to be seen.

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Hurricane Florence - Contingent Business Interruption Claims Reaching Far Beyond Its Outer Bands

The devastating impact of Hurricane Florence may be felt well beyond North and South Carolina Boasting over 460,000 manufacturing workers, North Carolina has the largest manufacturing workforce in the Southeast, and the 10th largest in the U.S. Manufacturing accounts for 20 percent of the state’s GSP, fifth-highest in the nation. North Carolina is home to more than 290 automotive manufacturing establishments and a workforce of over 26,000. North Carolina’s automotive manufacturing industry grew 25 percent in the past five years.

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Hurricane Florence: Civil Authority and Ingress/Egress Coverage in North and South Carolina

The evacuation orders issued in both North and South Carolina in advance of Hurricane Florence and the extensive flooding following its landfall will no doubt give rise to business interruption claims. Typically, coverage for these claims will fall under coverage for “civil authority” or “ingress/egress.”  Coverage for “civil authority” is usually an extension of coverage with similar language to the following:

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Hurricane Florence: Concurrent Causation in North and South Carolina

With formidable winds, tremendous storm surge and prolonged rain, the damage caused by Hurricane Florence will no doubt reignite the age-old debate: what happens when damage is caused by both covered and excluded perils? The two predominant cause tests utilized in multiple cause scenarios are the “efficient proximate cause” test and the “concurrent causation” test. Under the “efficient proximate cause” test, if the efficient proximate cause of the damage is a covered peril, then there is coverage for the damage. Under the “concurrent causation” test, if a covered and excluded peril contribute concurrently to the damage, then the damage is covered, regardless of the degree of damage caused by the respective perils.

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Hurricane Florence: Service Interruption Claims in North and South Carolina

As Hurricane Florence, now a Category 3 hurricane, with winds in excess of 120 mph, approaches the Carolinas, it is almost certain that there will be widespread and prolonged power outages throughout both states. This will inevitably lead to commercial insureds seeking coverage for business interruption losses arising from the disruption of power to their businesses. Whether these losses are covered will depend on the policy wording used and the specific facts of each loss. Nevertheless, in anticipation of these types of claims, it is prudent to become familiar with the outcomes of prior litigation arising out of service interruption coverage disputes. While there is a dearth of case law on this issue coming out of the courts of North Carolina and South Carolina, several decisions are instructive in evaluating claims arising from Hurricane Florence.

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Hurricane Florence: South Carolina Claim Guidelines

With the Imminent Arrival of Hurricane Florence in South Carolina, Insurers Should Keep in Mind the Following Requirements Contained in the South Carolina Insurance Code: 

  

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Hurricane Florence: North Carolina Claim Guidelines

With the Imminent Arrival of Hurricane Florence in North Carolina, Insurers Should Keep in Mind the Following Requirements Contained in the North Carolina Insurance Code:

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Oh No, Flo! – Hurricane Florence Upgraded to Category 4

Just as the Atlantic hurricane season reaches its climatological peak, the National Hurricane Center upgraded Hurricane Florence to a Category 4 hurricane with 130 mph winds and is expected to strengthen to 150 mph just before the anticipated landfall Thursday night.  “The storm is already 500 miles wide — meaning a large area will be at risk when it nears land.”

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Tropical Storm Gordon - Impact of Area-Wide Economic Conditions on Business Interruption Coverage in Louisiana and Mississippi

As Tropical Storm Gordon made landfall in Louisiana with wind speeds near hurricane strength, its impact will likely be felt across many states. Unlike the traditional business interruption loss, where the focus is on the impacted business and its pre-loss performance, when tropical storms and hurricanes hit, issues surrounding the impact of the storms on the overall economy can come into play. How courts deal with this issue can vary significantly based on the policy language used to define how the business interruption loss is to be calculated. 

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