Insurance Implications of the Gulf Oil Spill
Most times “Oil and water don’t mix”…until now. With hurricane season just underway and oil still gushing into the Gulf of Mexico, it might only be a matter of time before oil and water do mix to create a potential insurance claim. So, if oil ends up in/on your insureds’ property, is it covered?
First, it is important to note that insurance policies differ. Therefore, the discussions herein are restricted to standard ISO coverage forms. Insurance practitioners and policyholders must consult the specific policy which insures the damaged property in order to make a final determination as to whether or not there is coverage. Also, in many instances, coverage will be fact dependent and the necessary generalizations in a coverage discussion such as this may or may not apply to your insured’s specific circumstances and policy forms.
Fundamental to any direct property damage claim is the requirement for damage to covered property by a covered cause of loss. (Note: Some indirect coverages such as business income may only require damage to property – not necessarily covered property – to trigger coverage.)
Numerous coverage provisions of the current ISO HO 00 03 Homeowners policy and the ISO CP 00 10 Commercial Property coverage form could come into play in a hurricane, such as direct property damage, loss arising from orders of civil authority, additional living expenses, business income and extra expenses, debris removal, and so forth.
However, all these coverage provisions require that there first be damage by a covered cause of loss. Therefore, the key to determining whether or not any of these various coverage provisions would apply to a hurricane-and-oil loss would hinge on what role the hurricane played in putting oil into or onto an insured’s covered property.
Since damage by a hurricane has a water component and a windstorm component, each requires examination.
Read the full article HERE.
Article Source: Independent Insurance Agents and Brokers of America
