What is a Windstorm?

Most named perils property policies cover “windstorm.” Note that this doesn’t say “wind,” but rather “windstorm.” What constitutes a windstorm and how is it distinguishable from just wind? This issue recently arose in an auto claim, but the peril is the same as that under homeowners and commercial property policies. The Virtual University’s “Ask an Expert” service recently received a question where a bale feeder allegedly was blown against a pickup truck, causing dents and scrapes. The adjuster agreed to pay the claim as a collision loss, but denied it as a comprehensive claim due to windstorm.

According to the adjuster, the insurer defines a windstorm as 60 mph to 70 mph documented wind speeds, although this appears nowhere in the policy. The agency’s investigation revealed documented wind speeds of up to 30 mph. So, the questions are: What constitutes a “windstorm,” and can the insurer impose its definition on the insured?

While the term “windstorm” is debatable, the VU faculty members don’t believe the insurer can unilaterally impose a specific wind speed without reference in the insurance contract. After consulting several dictionaries, the U.S. Weather Service and the Beaufort Scale, the faculty members’ opinion is that the term is probably ambiguous.

For a complete discussion, click here.The Virtual University “Ask an Expert” service recently received the following question: “Can you provide a good rule of thumb for determining the unit owner’s coverage limit on an HO6? Most clients have no idea how to determine the limit they need. I recall attending a CIC seminar several years ago that provided a rule of thumb—I believe it was take 60% or 70% of the purchase price and use that as the limit. Can you tell me?”

This question has an answer, but not a simple, easy solution. The answer lies in who precisely owns what within the association and who is responsible for insuring what. This is often determined by a combination of state statutes, association bylaws and CC&Rs—and the policy forms themselves. Unfortunately, there is just no way around studying all of these documents in order to ascertain the responsibilities of all parties.

For a VU faculty discussion of this issue, click here.

Insuring Theft of Customers’ Information

Many businesses have extremely valuable information in electronic form. If insureds have access to others’ information on their or a customer’s premises, how can it be insured from loss—in particular theft? What if your insureds’ own employees steal it? What if it’s stolen by computer hackers or burglars? Is it a crime exposure, a liability exposure or something else?

Last May, a missing hard drive caused the American Institute of CPAs to issue a warning to all of its approximately 330,000 members that their names, addresses and Social Security numbers were among the data on the drive. It was not certain at that time whether the drive being shipped back from repair was lost, misplaced or stolen. The question, of course, is whether it’s covered or not. The problem is that the industry is largely at the mercy of liability and crime forms that were never designed to address a number of emerging exposures. What happened to the AICPA is just one example of how loss can occur.

To access a VU article that looks at more than a half dozen different scenarios and explores what is and isn’t covered, click here.

Managing Townhouse, Condo Unit Owner’s Risk

A condominium or townhouse owner is much more likely to have major insurance gaps in his p-c insurance coverage than any other personal insurance policy.

There are several critical issues in managing this unique risk, including adequacy of Coverage A limits, need for broadened perils, measuring the loss assessment exposure, determining interior structural risk, discovering pertinent state laws and covering the master policy deductible.

For more information, including 11 steps to a well-constructed unit owner’s insurance program, click here.

Are Personal Mobility Vehicles Covered?

First came motorized wheelchairs for the handicapped, then scooters for the elderly and now personal mobility vehicles for anyone who doesn’t want to walk long distances. Many stores, malls and amusement parks have these vehicles available, and they also are used for sightseeing tours. One 37-year-old rental customer at Disney World commented that he chose to ride through the theme park in order to save energy for dancing that night.

From handicapped to recreational use, does a homeowners policy cover these vehicles? It depends. One interpretive problem with the language in the homeowners policy is that it categorizes vehicles as “designed to assist the handicapped.” While the traditional wheelchair clearly fits that description, these new vehicles are used by a larger group of people with varying degrees of medical and health issues beyond the more limited group considered “handicapped.” And, in some cases, people use them solely for personal convenience and not medical or health reasons.

To find out if they are covered, click here.

Bill Wilson (bill.wilson@iiaba.net) is Big “I” director of the Virtual University, an online learning center for agents and brokers.