Invariably, it seems as if as quickly as the hurricane force winds stop blowing the claims denials start blowing in citing what insurance professionals refer to as “wind-driven rain.” While “wind-driven rain” is not a defined term in insurance policies, there is wording in the Insurance Services Office (ISO) homeowners policies and commercial property policies speaking to coverage.
An actual example illustrates the concept of what wind-driven rain is. In 2004, Hurricane Frances hit Vero Beach, where my parents live. Frances was a very “wet” storm and it moved very slowly. For more than 12 hours, Frances brought winds of around 100 miles per hour to the Vero Beach area. Amazingly, my parents’ house suffered no structural damage at all. The back of their house is a room about 25 feet by 25 feet with a pool table, piano, organ, furniture, and carpet over about 50 percent of the floor. The windows are divided into the top two thirds that are built in glass, while the lower one third are jalousie windows that have a handle crank used to open them. The windows have rubber seals around the edges that are designed to keep water out when the windows are closed. The house was built in 1968 and I suspect the windows and rubber seals are original.
I was in Vero Beach and we rode the hurricane out at a different location, a structure we felt was more hurricane resistant. Once the winds had died down to a safe level, I went to the house to check on damage. While there was no damage visible, the room on the back of the house had about one quarter inch of water on the floor; the carpet was soaked. Water had also dripped down the lower part of the wall and the baseboards were wet.
I was able to remove the carpet, dry out the floors with towels, and dry out the furniture. The damage was almost insignificant. Using a generator, we set up fans to dry everything out and within 24 hours all was well.
Situations like that are, unfortunately, not always the case. Significant water damage can take place in situations like this, especially in multi-story buildings. The cause of the interior water was, in my view, the force of wind pushing water against aged windows for over 12 hours. The wind had not created an opening, such as blowing out a window thus allowing water to enter.
With damage such as this, coverage turns to a homeowners policy or a commercial property policy. It’s critical that each individual policy be analyzed for coverage. Certainly, ISO has forms that some insurers use, but a significant number of insurers use endorsem*nts that change coverage. This analysis focuses only on ISO forms. It is entirely possible that coverage for wind-driven rain is different during a hurricane than similar damage not during a hurricane. For an article by The Merlin Law Group addressing this issue (citing a Florida court case where the exclusion was upheld) see “Wind-Driven Rain Versus Wind-Created Opening in a Building and Potential Coverage Implications.” Another good article, written by IRMI, is “When Applying the Limitation for Wind-Driven Rain, What Constitutes a Roof?”
Looking at the “industry standard” HO-3 policy, Coverages A and B are open peril. (Referred to casually as “all risk.”) Coverage C is named peril. Under the HO-6, all coverages are named peril but it’s almost always the case that the policy is endorsed to convert Coverage A to open peril.
For Coverages A and B, with open peril coverage there is no exclusion for damage from wind-driven rain. Under Coverage C, however, the policy states this:
B.Coverage C – Personal Property
We insure for direct physical loss to the property described in Coverage C caused by any of the following perils unless the loss is excluded in Section I – Exclusions.
2.Windstorm Or Hail
This peril includes loss to watercraft of all types and their trailers, furnishings, equipment, and outboard engines or motors, only while inside a fully enclosed building.
This peril does not include loss to the property contained in a building caused by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.
Note, specifically, the requirement that an opening must be created by wind. IRMI commentary provides this discussion:
The HO 3 only covers loss from rain, snow, sleet, sand, or dust to personal property inside a building under limited circ*mstances. Specifically, the direct force of wind or hail must first damage the building and cause an opening in a roof or wall. Then, the rain, snow, sleet, sand, or dust must come through that opening into the house, damaging the personal property. So, if Mary's home is hit by a large hailstorm that breaks several windows, and the ensuing rain enters the dwelling, rain damage to the personal property is covered. Conversely, if Mary inadvertently leaves a window up in her house that results in substantial water damage to her contents due to the storm, there is no coverage for her personal property. The opening through which the rain came was not caused by wind or hail. However, any damage to the dwelling (walls, ceiling, or wall-to-wall carpet) is covered under the open perils coverage applicable to the dwelling.This exclusion may also eliminate coverage for damage to the personal property of a building when, for example, the force of a hurricane or other severe storm causes rain to enter the building even when the roof, doors, and windows withstand the storm. It is possible that wind could blow hard enough to force water through the cracks in a home, without ever creating "an opening."
In the example of my parents’ house, no opening was created by the wind, so Coverages A and B would apply, but for the personal property under Coverage C the policy does not provide coverage. Remember, this is a standard ISO form.
It is very common, however, that insurers routinely use an endorsem*nt (Commonly a “special provisions” endorsem*nt) to modify Coverages A and B to track Coverage C so that an opening must be created for any coverage to apply. Further, the ISO “calendar year hurricane endorsem*nt” (HO 03 51 05 13) states this:
A. Loss By Windstorm During A Hurricane
With respect to Paragraphs B. and C., coverage for loss caused by the peril of windstorm during a hurricane which occurs anywhere in the state of Florida includes loss to:
1. The inside of a building; or
2. The property contained in a building caused by:
a. Rain;
b. Snow;
c. Sleet;
d. Hail;
e. Sand; or
f. Dust;
if the direct force of the windstorm damages the building, causing an opening in a roof or wall and the rain, snow, sleet, hail, sand or dust enters through this opening.
Under the ISO dwelling program, the DP-3 is the broadest policy. Like the HO-3, the DP-3 is open peril for Coverages A and B while Coverage C (if purchased) is named peril. Therefore, wind-driven rain would be covered for building damage but not for personal property.
Again, it’s critical to read each specific policy. The problem often surfaces where two neighbors have policies with different insurers, and one neighbor has coverage for wind-driven rain while the other does not.
One final note on the homeowners policy, relating to the HO-5 policy. Some insurers use this form which changes Coverage C from named peril to open peril. Under such policy, Coverage C provides coverage for wind-driven rain.
Looking at the ISO commercial property program, the most common policies used are the CP 00 10 – Building and Personal Property Coverage Form and the CP 00 17 – Condominium Association Coverage Form. Both forms are typically constructed with the CP 10 30 – Special Causes of Loss form. In the CP 10 30, there is no “exclusion” per se, for wind-driven rain.However, such damage is still not covered, due to the following wording in the Limitations provision:
C. Limitations
The following limitations apply to all policy forms and endorsem*nts, unless otherwise stated.
1. We will not pay for loss of or damage to property, as described and limited in this section. In addition, we will not pay for any loss that is a consequence of loss or damage as described and limited in this section.
c. The interior of any building or structure, or to personal property in the building or structure, caused by or resulting from rain, snow, sleet, ice, sand or dust, whether driven by wind or not, unless:
(1) The building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through which the rain, snow, sleet, ice, sand or dust enters; or
(2) The loss or damage is caused by or results from thawing of snow, sleet or ice on the building or structure.
This “limitation” would apply for both building coverage and “your business personal property.” It is not uncommon, especially in residential condominium association policies, that insurers provide coverage for wind-driven rain. Some agents use that coverage enhancement as a sales tool.
As stated earlier, it’s critical to review each policy. Where wind-driven rain is not covered by the policy, agency management should consider an agency practice relating to notifying customers of this limitation.
Copyright FAIA, October 2017.
