It’s been a while since I have seen Cat 5 hurricane damage.  In fact, the last time was back in 1992 when Hurricane Andrew came ashore in South Florida.  No shortage of Cats 1,2,3, and maybe a 4 in there somewhere in the past 26 years, but trust me, a Cat 5 hurricane catastrophe stands out and those memories will stay with you forever.

So, it all came back to me when I visited St. Maarten/St Martin, a Dutch/French island in the Leeward Islands, one of the first in the island chain to be hit by Hurricane Irma eight months ago. This was my first trip back after the storm, but some of my colleagues at Tutwiler & Associates Public Adjusters had already been on the ground shortly after the storm passed, meeting with old clients and signing up new property owners as soon as commercial flights resumed. Eight months later our efforts paid off as our clients’ property insurance claims are settled and the rebuilding planning and construction has started for them.

The conditions on the ground have vastly improved as most of the debris had been cleared from the roads, making the whole island drivable, but the extent of the damage was still breathtaking and apparent as soon as you exited the plane.

Makeshift tents have been erected on the tarmac at Princess Julianna Airport (one of the largest in the Caribbean and the newest) as the terminal had been destroyed on the inside as well as extensive damage to jetways, exterior cladding, roofing, etc. The internet is full of videos showing the wind and surf destroying everything in their path, so it’s very easy to see what conditions were like in the storms aftermath.

It has been reported that sustained winds where measured at 180 plus miles per hour, with gusts of over 200 MPH, clearly wind speeds that justified a Cat 5 rating. However, when I meet with friends and clients, if you mentioned Irma being a Cat 5 storm, all most everyone I meet paused for a minute with a faraway look and said Irma was not a 5 but something much larger.

For a most recent update on the airport you can read about the issues the Caribbean is facing here with this airport in its current condition: Exclusive airport renovations should take 18 months before completion

Not surprising, the airport problems with completing repairs has a big insurance component with many of the same issues that other islands and policyholders are facing in the U.S. in the aftermath of Hurricane Irma.

So, let’s discuss some ongoing claim issues in St. Maarten.  Perhaps readers will learn and pass along to others to avoid the quicksand that policyholders often get bogged down in during the aftermath of a disaster while dealing with their insurance claims.

As you can read, the airport authority is heading to court as there is a difference of what has been paid to date by NAGICO, an insurer with exposure all over the Caribbean. The payment to date has been reported as a $25M advance, the claim demand in total is $133M. That’s a huge difference in anyone’s opinion!

So why is there this impasse?  Well, according to a gentleman I met at this year’s Carnival celebration (a yearly island celebration much on the order of our New Orleans Mardi Gras) who had been in government for eight years and is now a very successful businessman on the island, part of the fight centers on the opinion that the staff that runs the airport did not do enough to mitigate the damages. Interestingly this same argument was reported in the link above.

Also in the article, it talks about the conditions on the ground following the passing of Irma. In my discussions with this gentleman, I told him the policyholder always has a duty to mitigate the loss but some reasoning has to be applied and that in part includes the conditions and ability of material, labor and other resources, such as equipment, etc., that is available to do any mean full mitigation. From what I know about the conditions in St. Maarten right after the storm, mitigation was not possible. Once the roof was gone, everything inside this airport terminal building would have been destroyed in short order given the rain and ocean salt water that poured into the building.

So, lesson number one is that the insured does have a duty to mitigate a loss but only to the extent given the conditions AND without wasting resources, which if used, will have no effect except to waste valuable insurance money that will be needed to replace and properly repair building items on a permanent basis.

Claim Tip #1: Get with your insurance agent now before the height of hurricane season and see what plans they have in place from the companies they represent to help their policyholders better understand the mitigation process and what is to be expected of them following a loss.

Claim Tip #2: Agree on a step-by-step plan of who and what is the best practice to mitigate your specific loss. After a loss, when the first of possibly many adjusters that will be assigned and reassigned to your loss, ask that person’s advice on what steps need to be taken to preserve and prevent further losses to the property they insure given the facts of the actual loss you sustained. AND GET THIS IN WRITING! IF THE ADJUSTERS WILL NOT COMMIT TO A PLAN OR IF THEY OUTLINE A PLAN THAT IS ACCEPTABLE TO THEM, SEND A CONFIRMATION LETTER AND OR EMAIL BACK TO THEM WITH A COURTESY COPY TO THE CLAIM MANAGER OR VICE PRESIDENT OF CLAIM OPERATIONS!

If they bring out an emergency service contractor, that person needs to be in on the plan and attend the meeting with you, your public adjuster, and the insurance adjuster. Agreeing on the front end of a loss about the best practices to mitigate your loss is critical to avoid situations like the St. Maarten airport debacle that may take years to resolve.

Another issue shared with me involves the “ask” versus the “offer” of the dollar amount of the airport loss (and others) notwithstanding the mitigation component. It seems that the consensus from most folks I talked with is that a lot of the insured claimants are overreaching in their claim demand, and on the other side the claim is that the insurance carriers are under paying. Nothing new here, this seemingly goes on all the time. But is it really necessary to play these games when this prolongs the claim settlement process?  Of course there will always be negotiations involved in loss adjusting, that’s why it’s called adjusting, but greed and its opposite, stingy or frugal to the point of acting in bad faith with low ball offers are in no one’s best interest.

On the insurance carriers side, at least in the Caribbean, they often use a tactic found in the AVERAGE CLAUSE which is a requirement that the insured is required adequate insurance to value or they will be hit with a penalty.  This is the same thing as a CO-INSURANCE provision found in most U.S. insurance policies.  So, what is the actual situation?  Do insurance companies use these obscure policy provisions to reduce their payout or do policyholders under insure their property to avoid higher premiums?  My guess is the truth is always in the middle.

Claim Tip #3: So the tip for policyholders is educate yourself before and after the loss. If you are going to underinsure, calculate the likely outcome. After the loss, educate yourself or get professional claim assistance to see if in fact you are really underinsured.  Remember, pre-loss construction prices versus post-loss costs will vary widely. The cost basis, (if accurate) that was used to insure your property when the policy was taken out or renewed, should be used and not the cost based on hyper-construction costs post-loss.

Finally, in a blog some months back I had written about construction means and methods I was witnessing in new construction in the Caribbean that sure looked to be able to stand up to the strongest hurricane winds. This blog featured the new concrete homes that at the time seem to be hurricane proof. After Irma, I met with a Dutch couple whose house I had watched being constructed. From a distance (see above photo), it looked great but on a closer inspection and a tour inside, it was anything but great. In fact, the whole inside had been destroyed. But the walls of concrete and the concrete roof survived. What happened I asked this couple?  Well it seems someone had either failed to follow the architect’s window plan or the fasteners of the windows were inadequately installed. The end result was the windows failed and the inside was destroyed while the building itself held up as designed. The next house over, which had to be a $2million plus home had the same result--windows failed, total destruction inside. In fact, I was told the Canadian homeowner evacuated his home in his underwear and a credit card!

Lesson learned! Now is a good time to check your home or business to see what can be done to better fortify the structure. Just as in Country Walk in Miami following hurricane Andrew, it’s the little things that can result in catastrophic damage to a home that otherwise was for all intents and purposes built to code. Let us know what you think.