Hawaii Insurance Division Issues Memo to Insurers for Lala Claims

The Hawaii Insurance Division issued a memo to insurers this week stating it expects them to handle claims from Tropical Storm and Hurricane Lala “promptly, fairly,” and in accordance with state law insurance contracts.

The memo on Wednesday from Insurance Commissioner Scott K. Saiki also advised carriers to consult with advisories issued by the National Hurricane Center, Central Pacific Hurricane Center and National Weather Service for the timing and scope of watches and warnings.

Related: Storm-Battered Hawaii Faces Torrential Rain, Mudslide Threat

The storm’s status changed from a hurricane watch advisory in some areas of the state to a tropical storm warning between August 13 and August 16.

When Lala hit, widespread outages left nearly 200,000 homes and businesses initially without power. Heavy rainfall topping 3 feet in some areas resulted in flash flooding. Rising waters and high winds damaged or swept away roughly 100 homes.

The division advised carriers to:

• Evaluate each claim based on the facts of the loss. The property’s location, the timing of the damage and the actual cause of loss may all be relevant to determining which policy, coverage, or deductible applies.
• Apply the policy language as written. The existence of a Hurricane Watch, Hurricane Warning, or named storm does not, by itself, establish which coverage or deductible applies to a particular loss.
• Distinguish storm classification from watches and warnings. A hurricane watch or warning may be in effect even when the storm itself is officially classified as a tropical storm. Insurers should not treat these terms as interchangeable unless the applicable policy expressly does so.
• Evaluate causation on a claim-specific basis. Damage should not automatically be characterized as hurricane, tropical storm, flood, or other damage solely based on the broader weather event.
• Clearly explain coverage determinations. If coverage is denied, limited, or subject to a particular deductible, the insurer should identify the relevant policy provisions and clearly explain the factual and contractual basis for its determination.

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Carriers
Claims