5 lessons from Sandy: Homeowners insurance

5 insurance reminders from Superstorm Sandy
Homeowners insurance

In the wake of Sandy, consumer advocates have been sounding an alarm about something called "the anti-concurrent causation clause," found in many homeowners insurance policies.

Basically, this clause means if your home is damaged by both something you're insured for, such as wind, and something you're not covered for, such as a flood, your insurance company may not pay for the loss.

But there is no single definition for the clause, says University of Minnesota law professor Daniel Schwarcz, an insurance law specialist who also is a consumer representative to the National Association of Insurance Commissioners.

Coverage varies, terms differ, and your insurance agent may have difficulty explaining how the clause is enforced, Schwarcz says.

After Hurricane Katrina walloped New Orleans in 2005, these clauses became the subject of lawsuits, at least partly because the damage was so severe that it was tough to tell whether wind or water caused it, says attorney Randy Maniloff of White and Williams in Philadelphia, who represents insurers.

He doesn't expect that to be the case with Sandy-related claims because it should be easier to determine what caused the damage.

Meanwhile, be sure to review the "exclusions" section of your homeowners insurance policy, which explains what's not covered.


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