Defining Occurrence – When Policy Definitions Do Not Apply To All Coverages
September 24, 2020
Hurricane Florence is rapidly intensifying into a major hurricane and is expected to make landfall later this week in North Carolina and South Carolina. The storm surge, destructive winds and rainfall flooding are expected to challenge historical records in the area. Those in Florence’s path are urged to take the necessary precautions and monitor local government resources and updates.
Once Florence passes through the region, insurance professionals can expect a deluge of claims activity. While both North and South Carolina have felt the effects of recent Hurricanes Irene and Matthew, for example, many insurance professionals have limited familiarity with the particularized coverage issues which may arise in both states. Navigating the laws of both states, which can be both parallel and disparate, is going to be important in Florence’s aftermath.
For example, both North and South Carolina have little-known statutes requiring the issuance of blank Sworn Statement in Proof of Loss forms to policyholders very soon after notice of a new property claim is received. Failure to comply with such statutes can compromise an otherwise strong coverage position.
When a property suffers a total loss due to hurricane winds, the two states value the insurance claims differently. South Carolina is a “valued policy” state for fire losses, meaning that once a “total loss” is established under the law, the policy limits typically become available. But for a non-fire loss such as a Hurricane, the policy’s valuation provisions govern. The policy limits are not automatically owed. North Carolina is not a “valued policy” state – it utilizes the “broad evidence rule” to value a total loss, which may ultimately be beneath the policy limits.
Lastly, the recent scourge of Assignment of Benefits claims in Florida and other jurisdictions has not fully invaded North or South Carolina yet, but Florence may change that. Historically, both states have permitted post-loss assignments of benefits, but the laws in both states are relatively under-developed, meaning that case law from other jurisdictions, such as Florida, may become persuasive on this issue.
Butler, approaching its 40th year serving the insurance industry, stands as a leader in property coverage analysis and legal advice nationally. Specifically, Butler’s Charlotte office routinely advises insurers in both North and South Carolina and stands ready to assist those in need, whether before or after Hurricane Florence does its damage. Please feel free to reach out to Butler’s Charlotte Office Property Coverage team leaders, Andrew Watson and Nicholas Goanos as needed to discuss any questions which may be pressing for you as Florence heads toward landfall. And, of course, if you are in Florence’s projected path, please take all available measures to protect yourself, your family, and your property.