Tropical storm season creates issues for everyone, and the insurance field is no different.
The past few seasons, a new problem has cropped up around subtropical storms.
Some Louisiana insurance policies have a second deductible for “named” tropical storms. Usually, this deductible applies when the National Hurricane Center designates a storm with a name.
However, now subtropical storms are being named. This creates issues. Which be applied is confusing, for insurance companies and their clients.
Because a policy is a contract that both parties are beholden to, specifics are important. Some policies only require a storm system to be a “named storm" by the National Hurricane Center. A separate deductible then applies whenever any storm receives a name.
However, other policies require a system to be classified as a tropical storm or a hurricane. In these situations, the name of a storm does not matter. Instead, insurers must focus on the official classification of the event.
Policies that only list tropical storms or hurricanes wouldn't include subtropical storms in their coverage.
A policy including all named storms includes any storms named by the National Hurricane Center. The designation of a hurricane, tropical storm or subtropical storm does not matter. This is the more inclusive option because the Center has begun naming subtropical storms.
When the policy requires a certain storm designation, the naming convention does not apply.
It’s important insurance agents and companies understand the distinction and inform their customers accordingly. Some customers may be confused as to when their policy takes effect and what storms are covered.
This distinction highlights the importance that all policies have clear definitions. The policyholder and the company must agree on all terms of the policy. If there are any disagreements, a skilled insurance attorney can help.