The recent Kona Low storms that hit all islands were devastating, causing significant property damage. Homeowners and businesses will be seeking coverage under their insurance policies to recover for their losses. Here is a brief look at what may be covered and which exclusions may be troublesome in homeowners’ and commercial property policies.

Typically, both a homeowners’ policy and a commercial property policy include a grant of coverage for “direct physical loss of or damage to Covered Property.” Covered perils are listed, including such events as fire, lightning, or windstorm. Covered Property includes dwellings, other structures on the property and personal property. Additional coverages are usually provided. This includes debris removal after a peril insured against or collapse of a structure. In a homeowners’ policy, additional living expenses are likely covered when the damaged home is not fit to live in.

After stating which property damaged by listed perils is covered, the policy lists exclusions.. For example, loss caused by wear and tear or deterioration is excluded from coverage. Mold, fungus or wet rot are also excluded. Because floods are typically covered by a flood policy, damage caused by water is also excluded. The policy defines water damage as “flood, surface water, waves, tidal water, overflow of a body of water, or spray.” Hopefully, victims of the recent storms have a flood policy to fill this gap in coverage created by water damaged exclusions.

The homeowners and commercial property policies impose duties on the policy holders. The insured must give prompt notice of a loss. Further, the policyholder must take all reasonable steps to protect the property from further damage.

Once it is determined the loss is covered, the policy sets forth how payment for the loss will be made. The policy typically provides that the insurer will make an initial payment of actual cash value, meaning the value of the property minus depreciation. Once the property is replaced or repaired, replacement cost value is paid, meaning an additional payment reflecting the cost of repairing or replacing the damaged property without deduction for depreciation.

If the insurance company and the policyholder disagree on the value of the property or the amount of the loss, either may request an appraisal. Each party chooses an appraiser. If the two appraisers cannot agree on the value of the property and amount of loss, they select an umpire. A decision agreed to by any two will set the amount of the loss.

We wish the best to all homeowners and businesses suffering damage from the recent storms.