Hurricanes always generate a certain dread as well as excitementwithin the insurance industry.

While insureds may be boarding up windows and packing to leavethe area, adjusters may be packing to enter those same areas assoon as the damage is done.

Some are getting ready to go to areas that get struck to handlean onslaught of claims, remaining adjusters will have to handleextra loads, and underwriters will enforce moratoriums and refusenew policies within a given areas.

Moratoriums

One of the first things that happens when a storm is building isthe enforcement of moratoriums on new business. Most carriers haveguidelines providing that once a tropical depression, storm orhurricane watch or warning has been issued by the National WeatherService, coverage can't be written until a certain number ofhours after the watch or warning expires, usually anywhere from 24to 78 hours. This is to avoid a person buying insurance because theapplicant needs coverage immediately.

The moratorium may apply to increases in coverage as well. Also,the declaration of a state of emergency or announcement ofevacuation for part of the state may trigger a moratorium by agiven carrier.

The moratoriums generally apply to property policies, eitherhome or commercial. Some carriers will still write Auto liabilitypolicies as those coverages are not affected by storms.

Underwriters are key

Underwriters are the key employees when moratoriums are put inforce. It's their job to know the territory the moratorium affects,and to be sure that no policies within that area are written duringthe time of the moratorium.

Flood policies have a built-in waiting period of 30 days beforecoverage takes effect. This avoids having to put moratoriums inforce for any given storm in any given area. Flood policies alsohave a particular definition of flood, so not every situation iscovered even with a flood policy.

Related: NAPSLO's push continues to get Flood bill to thefinish line

South Carolina State Troopers, right, lead the first wave ofcars evacuating on the reverse lane of Interstate 26 Oct. 5, 2016,as traffic headed towards Columbia, S.C., near the Remount Roadoverpass in North Charleston, S.C., in advance of HurricaneMatthew. (Photo: AP/Mic Smith)

State insurance departments

Insurance departments play a part in storm preparation and cleanup as well. They may issue moratoriums restricting the canceling ornonrenewal of policies that suffer damage from the storm, or theymay restrict cancellations or nonrenewals to a small percentage ofthe book of business.

Restricting cancellations and nonrenewals ensures thatindividuals don't lose their insurance coverage due to one storm.After Hurricane Andrew, Florida took such steps. Even so hundredsof thousands of homeowners lost their coverage, leading Florida tocreate a carrier of last resort.

In event of a large storm, there often aren't enough adjustersin the state to handle the volume of losses. Insurance departmentsthat require adjusters to be licensed will issue special provisionsto allow extra adjusters to enter and work in the state to helpsettle claims.

South Carolina has already issued such a bulletin becauseHurricane Matthew is predicted to impact the coast and could be acategory 2 or 3 storm at the time. Tropical-storm andhurricane-force winds are expected, as well as flash floods andother hazards. This bulletin is in effect until further notice, andthe state is referring interested adjusters to its websitefor further information.

Related: 20 most helpful state insurancewebsites

Firefighters operate a drone to survey damages in the churchof the village of Cossito, central ItalyAug. 27, 2016 following thedevastating earthquake that struck a mountainous region of centralItaly. Drones are expected to be used in a similar manner to surveydamages in the aftermath of Hurricane Matthew. (Photo AP/AndrewMedichini)

Adjusters

Adjusters are impacted the most when storms occur. They'rerequired to know the policy coverages and exclusions, and be ableto explain them to insureds. The availability of GPS and navigationsystems makes finding insureds much easier. Before GPS, adjusterswere using paper maps and trying to find roads when the signs hadbeen blown down.

Adjusters may have a company-issued go kit: a jacket with thecompany name and logo clearly displayed so that insureds canidentify representatives, drafts that can be written onsite andgiven to insureds for immediate expenses, flashlights, tapemeasures and other tools that may assist in reviewing damagedareas. Adjusters also need access to copies of the policies forreference to ensure coverage is available. Often adjusters arelocated out of the storm area to have access to electricity andother necessities that may be out of service.

Traveling adjusters are not the only ones under duress.Adjusters that remain behind suddenly have double the workload, asthey are covering for the losses that occur at the home office.They may be adjusting claims in areas they don't normally handleand working with unfamiliar policy language.

Drone potential

Drones have the potential to make adjusting in storm areas mucheasier and faster than before. Allstate has already used drones toinspect hail damage in Texas. After a hurricane drones can be usedto access areas that are restricted by local authorities or toodangerous for adjusters to enter until some cleanup has occurred.Other carriers are almost certain to start using drones in theaftermath of Hurricane Matthew if it hits as predicted.

Public adjusters face different issues. Some states restrictpublic adjusters from approaching insureds for at least seven daysin a disaster area. (For example in California it's a felony forpublic adjusters to do so.) This is to prevent public adjustersfrom taking advantage of insureds at a particularly vulnerabletime. Although public adjusters represent the insured, they receiveanywhere from 2 to 35 percent of the insured's settlement, with anaverage of 15 percent.

Related: Adjuster tools for water losses

In this photo taken Aug. 15, 2011, Tom Malone lashesbuilding materials down to his truck at a Home Depot store in NorthLittle Rock, Ark. It's common for building materials to be in shortsupply in storm-damaged areas as people try to make repairs orrebuild. (AP Photo/Danny Johnston)

Other issues

Once the adjusters have processed a claim and issued payments,repairs are the immediate issue. Insureds are required to maketemporary repairs to protect property as much as possible.

What many don't realize is that these temporary repairs may haveto last longer than a few days due to lack of available contractorsto do the work and materials to do the repairs. Prices are thendriven up by supply shortages against a large demand. Insureds mayhave to stay in alternative housing for a longer period oftime.

Agents and company staff in the area will have to deal with their own losses while handling thoseof their insureds as well. Agents should have data on theircustomers backed up and stored safely so they can access theinformation to assist adjusters and insureds.

Agents and adjusters will need to find places to set up shop,and that may be some distance away. Agents will have to be able tocommunicate with staff and see that they have a safe place to work.Adjusters may have issues with lodging and rental cars.

Misconceptions

Insured misperceptions are an enormous problem. Many don't readtheir policy nor pay attention to warnings from the Federal EmergencyManagement Agency (more commonly called “FEMA”) or states thatHomeowners' policies don't cover damage from floods. When a stormoccurs and their claims are denied, they blame the industry.

Explaining lack of coverage to insureds is a daunting task thatadjusters and agents face anytime there is a major storm. The stateinsurance department may be swamped with complaints for things thatare clearly excluded in the policy.

Related: With Matthew coming, you may need a hurricaneattorney

View our full coverage on disaster risksand recovery for Hurricane Season 2016

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