LexisNexis Experts Probe Aftermath Insurance Issues; One If By Land, Two If By Sea…Covered If Wind, Not If Water

Business Wire, Sept 13, 2005

DAYTON, Ohio -- For property- and business owners expecting to find a semblance of normalcy after Hurricane Katrina, the answers boil down to an insurance policy and the type of coverage purchased, say two experts from the LexisNexis Expert News Source (LENS) program. LexisNexis makes the nation's leading attorneys, experts, authors and editors available to you through its LENS program for perspective, expertise, commentary and substantiation.

Rarely do "shelf" property insurance policies pay claims if damage is by water; however, in the event that the burden of proof points to wind first, the insured may receive pay outs. As for why flood insurance is not covered by shelf policies, the Federal Emergency Management Authority (FEMA) writes flood insurance only and borrows from the U.S. Treasury to pay claims.

According to Mitchell L. Lathrop, author of Insurance Coverage for -Environmental Claims, published by LexisNexis (www.lexisnexis.com/bookstore), and of counsel with Duane Morris, LLP in San Diego and New York:

--Environmental disasters usually entail one primary hazard slated for clean up. Of the five hazardous categories (heavy metals, biologicals, oil, chemicals and mold), New Orleans has ALL five. The magnitude and long-term impact to the environment of this hurricane will be felt for decades.

--How to clean? You cannot bleach an entire city; heavy metals without a half life will exist indefinitely in the soil, i.e., lead. Sewage treatment facilities are expected to be fixed last (because they're still underwater), which suggests higher contamination, longer term.

--Hurricane Katrina will impact the globe's insurance industry. This is due to the risk-spreading nature of reinsurance that has likely assumed approximately 95 percent of the risk from the original policy-issuing insurance companies. (Swiss Re, the second largest reinsurer in the world next to Munich Re, announced 9/12/05 it anticipates a $1.2 billion loss due to Katrina. Katrina's ripple is unfathomable.)

--The reinsurance industry has more money than Uncle Sam. This hurricane will not devastate large insurance companies; however, smaller insurance companies may find themselves in financial difficulty (which poses another set of issues due to the October 17 deadline for enactment of the new bankruptcy bill).

According to Luke S. Brown, LexisNexis analyst and practicing insurance attorney:

--  The hurricane may spawn litigation relating to:

        --  Insurance policy coverage for damaged property
            (interpretation of what's covered and what's not).

        --  Amount recoverable for the property (insurance policies
            have dollar limits).

        --  Insurance companies and their reinsurers (insurer's
            ability to recover payments from its own insurer).

        --  Policyholders seeking recourse through state insurance
            guaranty funds for inadequately reinsured insurance
            companies.

        --  Coverage for mold damage, an exclusion in many property
            insurance policies, and remediation for repairable
            structures.

        --  Inventories of lost property, especially if prepared
            before the storm, often facilitate settlement, as do
            photographs if still available.

    Property owners must:

        --  File a claim immediately, regardless of certainty about
            coverage. Insurance policies generally require prompt
            assertion of claims; do not delay and cause claim denial.
            Most affected insurers have established emergency claim
            reporting hotlines and locations.

        --  Photograph damages to preserve evidence for adjustors.

        --  Confirm the identity and licensure online at state
            departments of insurance or by phone of any insurance
            adjuster who contacts you. Be especially cautious of
            insurance adjusters offering to be advocates in insurance
            claims. Emergency conditions often breed many who are
            unscrupulous.

About Mitchell L. Lathrop, Esq. San Diego & New York

Mitchell L. Lathrop is LexisNexis author of Insurance Coverage for Environmental Claims, available at www.lexisnexis.com/bookstore, and a partner with Duane Morris LLP dividing his practice between the firm's San Diego and New York offices. He practices law in the areas of insurance, reinsurance, environmental, securities and complex litigation.

Mitch is a member of the American Board of Trial Advocates and a certified civil trial specialist and certified arbitrator. He is a frequent lecturer in the areas of insurance law and member of many prestigious legal associations. He is an association board director with both the New York Metropolitan Opera and the San Diego Opera. He received his J.D. from the University of Southern California and graduated from the United States Naval Academy.

About Luke S. Brown, Tallahassee, FL

Luke S. Brown is a nationally recognized attorney with more than 25 years of background in the fields of insurance regulation and compliance, insurance fraud and as a former regulatory attorney with the Florida Office of Insurance Regulation. As a LexisNexis insurance analyst, he culls his expertise to author and develop products spanning a wide range of insurance issues. Luke's career path has included practicing insurance law in small firm settings and with one of the nation's largest law firms. An adjunct professor with Florida State University College of Business, Luke teaches legal and political aspects of insurance. In addition, he is a frequent speaker and author in the U.S. on insurance regulatory issues as well as insurance fraud.