Wind or Water? Breaking Down Slab Claims After Hurricanes

Sep 15, 2021 / by Matt Hinds-Aldrich

Risk Management Service Inc. (RMS) estimates $25 billion to $35 billion in onshore and offshore insured losses in the Gulf of Mexico alone were caused by Hurricane Ida. This doesn’t include the damage to other parts of the country. While the fundamentals of hurricanes are widely understood these days, there remain several important nuances to hurricane losses that are essential to understand for insurers, regulators, and the general public alike. Here we will look at one less understood type of claim from hurricanes – slab claims.

Our Risk Awareness Service: Hurricane Resource Center breaks down the complexity of slab claims that are often contentious. Let’s break it down: A slab claim is when a hurricane completely destroys a coastal property, leaving only its concrete foundation – or for our purposes, a slab.

Most private insurers will cover damage caused by wind from a storm, but not by water. Buildings destroyed by water—or storm surge—typically would only be covered if they have a policy with the National Flood Insurance Program (NFIP), managed by the federal government. (To read more about closing the flood insurance gap, see our previous story on Views.) This is a key distinction when carriers are determining whether the damage falls within the coverage of the policy.

    • Destroyed By Wind = coverage by private insurers;
    • Destroyed By Water = NFIP coverage.

In the 2000s, hurricanes like Ivan, Katrina, Rita and Ike led to class-action lawsuits and a tipping point for slab claims. Following hundreds of millions in payouts, a federal law was passed in 2012 calling for the Federal Emergency Management Authority (FEMA) to develop “sophisticated models” and “post-storm assessments” to avoid any uncertainty about what is and is not covered under a slab claim.

According to this RMS blog from shortly after the law was enacted, slab claims are defined as where there is “no material remnant of physical buildings” remaining and “insufficient or no tangible evidence.”

While it’s too early to know the amount of slab claims filed from Ida, there is certain to be an influx of them. The hope now is that we’ve learned the lessons of the past and the laws put in place will make the claims process a more effective one.

To learn more about Slab Claims and other nuances of hurricane losses check out our Hurricane Resource Center.

To see the latest hurricane activity, check out our Hurricane Live Tracker.

 

Tags: Issues & Trends, Homeowners, New/Emerging Risks, P&C Insurers, AAIS Insights, Insurance Line of Business, Flood Insurance, flood, risk mitigation, hurricanes, hurricane resource center, slab claim, risk awareness service, catastrophe, national flood insurance program

Matt Hinds-Aldrich

Written by Matt Hinds-Aldrich

Sr. Risk Strategy Lead - Dr. Matt Hinds-Aldrich, or "Dr Matt", has led a number of national initiatives and projects to improve how fire departments collect, analyze and use data to focus their efforts, improve their operations, and demonstrate their value. At AAIS, he helps lead the development, expansion, and adoption of the FLAMES (Fire Loss and Mitigation Evaluation Score) methodology for insurers to assess local fire protection and mitigation efforts. Matt’s Ph.D. research at the University of Kent (England) focused upon occupational culture, and specifically, firefighter culture.

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