Winter Weather Questions Provide Brainteasers

After the storm, accumulated snow fell from one rooftop to another, damaging a condenser on the lower rooftop. Snow that had accumulated from the same storm also slid from a different rooftop, damaging another building. The insurance carrier says the damage was caused by two separate occurrences and that two separate deductibles should be applied. Since the snow accumulated from the same storm, were there one or two occurrences?

Our prompt answer was that these were two separate claims because the snow slides were separated in time and place from another. Our position was that the damage was caused by two separate and distinct accidents and not from the single original snowstorm.

Some subscribers disagreed with that, stating that since a single storm dumped the snow and the snow caused the loss, there should be only one claim, and, hence, only one deductible applied. Although that argument may make sense to some, we stand by our analysis because there were different rooftops, two separate and distinct slides with a definite break in both time and place, and therefore two losses, two claims, and two deductibles.

Another frequent source of questions is the limitation section of the commercial property and business owners' policies. This limitation voids coverage for damage to interior property caused by rain, snow, sleet, ice, sand, or dust unless those elements enter the building through an opening that was caused by a covered cause of loss. As one subscriber stated, "It seems to me that this limitation is included in order to preclude coverage for wear-and-tear losses. For example, there is no coverage if rain or snow gets into a building through a worn roof. But the policies already exclude coverage for wear and tear, so why is the additional limitation included?"

It is true that insurers should not be paying maintenance losses, such as repairing worn-out roofs. But, without the limitation, a case might be made that the cause of loss was the snow or ice that got into the building and not the worn-out roof. Additionally, the limitation also precludes coverage for human error, such as interior damage caused when a window or door is accidentally (or intentionally) left open and the elements damage the interior.

One of the most interesting aspects of this limitation is that, while it appears on both the commercial property and business owners' policies, the wording is different. The commercial property form excludes coverage for damage to both the interior of a building or structure — or to personal property within that building or structure — that is caused by rain, snow, sleet, ice, sand, or dust (whether driven by wind or not), unless the building is first damaged by a covered cause of loss. Additionally, the limitation does not apply if the loss is caused by the thawing of snow, sleet, or ice on the building or structure.

The business owner's policy, however, only limits coverage in this area to the interior of the building. There is no mention of business personal property, so tenants in a leased building have protection in the event the elements damage their business' personal property even when a covered cause of loss has not first damaged the structure.

Another of the frequently contested, weather-related claims involves damage that is caused by both wind and another element: rain, snow, sleet, or ice. In a Missouri case, Lane v. Cape Mutual Insurance Company, the court dealt with a policy that covered windstorm but excluded snow. The claim involved the collapse of a farm building during a wind and snowstorm. The lower court's ruling, which was upheld on appeal, found that a "windstorm, absent a restriction in the insurance policy to a wind of certain velocity or duration, is a wind of any force causing damage." Although testimony revealed that the snowstorm was so fierce and long-lasting that the driveway had to be plowed frequently, the appeals court upheld the decision and the insurer was held liable for the damage under the peril of windstorm.

This brings up an interesting point. We frequently field questions from subscribers who think we should offer opinions not only on whether coverage applies to a specific fact situation, but also an opinion on the actual cause of loss. In all claims — but especially those involving causes that are not clear cut — it is the jury that determines what actually happened, as is illustrated in another Missouri case, Hahn v. M.F.A. Insurance Company. This case involved damage to farm machinery and the shed housing after a roof collapsed inward.

The loss occurred during a windy snowstorm in which snow accumulated on the roof. The appeals court upheld the jury determination even though "Our examination of the record creates a substantial doubt if windstorm was the dominant cause of the damage. However, it is not our function to determine the facts … the jury may have believed plaintiffs' evidence that, due to the wind, little-or-no snow accumulated on the roof before the damage occurred." Once again, the Hahn case proves that the jury determines the facts of the case and the coverage must then be applied against those facts.

Winter Blues

The Insurance Information Institute lists winter storms as the third-largest cause of catastrophe losses in the U.S., resulting in about $1 billion in insured losses annually. From 1987 to 2006, winter storms resulted in more than $24 billion in insured losses, which adds up to almost eight percent of the $310.7 billion in catastrophe losses experienced during this time period.

Below are the top five categories of catastrophe losses and their associated percentages of loss for the same period of time:

?Tropical Cyclones – $141.6 billion (45.6 percent)

?Tornadoes – $82.4 billion (26.5 percent)

?Winter Storms – $24.4 billion (7.9 percent)

?Terrorism – $22.9 billion (7.4 percent)

?Earthquakes – $19.5 billion (6.3 percent)

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As winter progresses, the number of storm-related losses will once again increase. But the FC&S editors have no place to go, so let it snow! Let it snow! Let it snow!"

Diana Reitz is editorial director for FC&S and FC&S Online. She may be reached at dreitz@nuco.com.