Only about a third of the Florida homes in the two coastal counties devastated by Hurricane Ian have insurance policies covering flood damage, which usually is excluded from standard homeowners' policies throughout the US.
In some of the inland counties that also suffered severe flooding from Ian, only a handful out of every 100 homes that were destroyed have specific flood coverage, according to a report in the Wall Street Journal.
Thousands of underinsured homeowners in Florida are expected to turn to the legal system seeking to force insurance carriers to cover the damage from the storm, WSJ's report says.
Insurance carriers who don't think they are legally obligated to cover repair costs from flooding are circling their wagons and preparing for an onslaught of litigation with billions of dollars at stake.
Citing the legal frenzy that occurred after Hurricane Katrina flooded New Orleans and parts of Mississippi in 2005, legal experts say the outcome could come down to a determination of whether wind or water was the primary cause of damage to a property during the hurricane.
During the legal battle over who would pay for Katrina's damage, lawyers representing homeowners made headway in lower courts by challenging ambiguous clauses in standard policies dealing with dual wind and flooding damage, WSJ's report said.
Years later, many insurance companies prevailed on appeal. The lengthy and expensive appeals process also induced many who had filed cases to reach settlement agreements.
As an example of the challenges face by homeowners in trying to distinguish between wind and water damage while pursuing damage claims, WSJ cited the situation now confronting a homeowner in Cape Coral, FL.
Ian blew the chimney and part of the roof off the homeowner's ranch house in the Lee County community. Water, which reached levels of two feet inside the house, damaged floors, lower sections of walls, furniture and appliances.
The homeowner's home-insurance policy provides up to $409K for the dwelling and $102K for personal property. His separate flood insurance policy provides $200K for the building, but nothing for the contents.
When the homeowner called a mold-remediation firm, he was told that neither policy would cover the service if the damage was due to rising water.
Insurance adjusters generally look at marks left by flooding on walls—and sand on floors—to ascertain flooding damage, but a storm as powerful as Ian has left many properties with nothing left but foundational slabs, known in the jargon of the insurance as "slab claims."
Mohsen Rahnama, chief risk modeling officer for catastrophe-modeling firm RMS put the problem succinctly: "The house is gone. Did the [storm] surge wipe it out, or the wind?" he told WSJ.
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