Coverage and Fraud. La. Ins. Guar. Assn. v. Interstate Fire & Cas. Co., 93-C-0911 (La. 1/14/94); 630 So.2d 759, 764.

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2 Coverage and Fraud Presumption of Coverage Insurance contracts and policy provision ambiguities are interpreted in favor of coverage and against the insurer. La. Ins. Guar. Assn. v. Interstate Fire & Cas. Co., 93-C-0911 (La. 1/14/94); 630 So.2d 759, 764.

3 Coverage and Fraud Burden of Proving Fraud The insurer bears the burden of proving fraud, which fraud must have been material to the claim or issuance of the policy. Mutual Life Ins. Co. of New York v. Rachal, 166 So. 129, (La. 1936); St. Paul Fire Ins. Co. v. St. Clair, 193 So.2d 821, (La. App. 1 Cir. 1966).

4 Common Coverage Defenses I. Pre-existing Damage II. Failure to Mitigate III. Failure to Cooperate IV. Vacancy V. Double-recovery

5 Coverage Investigation Tools I. Meteorological Data II. Thermal imaging III. X-Ray

6 Coverage Investigation Tools IV. Aerial and Street View Imagery / Pictometry V. Prior claims VI. Underwriting documentation Example: The Calico Cat Case 2008 (Hurricane Gustav)

7 Coverage Investigation Tools 2011 Google Earth Imagery Hurricane Isaac Adjustment Photo

8 Coverage Investigation Tools VII. Drones VIII. A/V Recordings IX. Infrared Cameras / Scanners

9 Coverage Investigation Tools X. 3-D Graphical Model Scanners XI. XII. Ground Penetrating Radar High-voltage Roof Membrane Integrity Testing XIII. High-voltage Continuity Testing of In-situ soils XIV. Moisture Meters

10 Fraud I. Material misrepresentation A. False statement bearing 1. on risk or 2. used to induce payment and is B. Intentional II. Fraud in Application A. Underwriting Approval B. Lower Premium III. Fraud in Claim Process

11 Tools for Investigating Fraud I. Examination under oath II. Aerial and street view imagery III. Subpoena power IV. Public records

12 Fraud Example: Insured filed a Hurricane Isaac homeowners claim with a history of two prior wind claims. Re-inspection revealed discrepancies regarding condition of the front elevation. Photo of home from Hurricane Gustav claim (2008).

13 Fraud Early August, 2012, wind claim photo

14 Fraud Hurricane Isaac claim (late August, 2012) reinspection photo

15 Fraud Hurricane Isaac claim (late August, 2012) reinspection photo

16 Fraud by Engineers and Adjusters Adjusters: Bias / result-oriented adjusting Misunderstanding Communication errors Managerial pressure Engineers: Bias Refusal to consider all available information Obsolete analysis / failure to use best practices Lack of qualification / certification Managerial pressure

17 Wind versus Wave Analysis Weather Research General Building Construction Wind Sensitive Building Components Main Structural System Evaluation of Wind Damage Evaluation of Storm Surge Damage Storm Damage Assessments Wind versus Wave Analysis

18 Weather Research for the Region Weather Research for the Region Maximum Recorded Wind Speeds Recorded Elevation of Storm Surge Timeline of Hurricane Forces Path of the Eye of the Hurricane Saffir-Simpson Scale Information Sources Storm Damage Assessments Wind versus Wave Analysis

19 Weather Information Sources Immediately following the storm, the available information is very limited. Interview with witnesses FEMA website provides preliminary data National Hurricane Center offers tracking information Video of the storm, if available News reports Storm Damage Assessments Wind versus Wave Analysis

20 Weather Information Sources NOAA Satellite Imagery

21 Weather Information Sources Base Flood Elevation Maps

22 Aerial Photographs Before Hurricane Katrina After Hurricane Katrina Storm Damage Assessments Wind versus Wave Analysis

23 IPET Wind Speed Maps

24 Saffir/Simpson Hurricane Scale

25 Saffir/Simpson Hurricane Scale Category 1 Hurricane Winds mph (64-82 kt) No Real Damage to Buildings Damage to Unanchored Mobile Homes Some Damage to Poorly Constructed Signs Some Damage to Shrubbery and Trees Some Coastal Flooding and Minor Pier Damage Examples Irene 1999 Allison 1995 Storm Damage Assessments Wind versus Wave Analysis

26 Saffir/Simpson Hurricane Scale Category 2 Hurricane Winds mph (83-95 kt) Some Damage to Building Roofs, Doors and Windows Considerable Damage to Mobile Homes. Flooding Damages Piers and Small Craft in Unprotected Moorings May Break their Moorings. Some Trees Blown Down Examples Bonnie 1998 and Georges 1998

27 Saffir/Simpson Hurricane Scale Category 3 Hurricane Winds mph ( kt) Some Structural Damage to Small Residences and Utility Buildings Large Trees Blown Down Mobile Homes and Poorly Built Signs Destroyed Flooding near the Coast Destroys Smaller Structures with Larger Structures Damaged by Floating Debris. Terrain may be Flooded Well Inland Examples Keith 2000, Fran 1996 and Opal 1995

28 Saffir/Simpson Hurricane Scale Category 4 Hurricane Winds mph ( kt) More Extensive Curtainwall Failures with some Complete Roof Structure Failure on Small Residences. Major Erosion of Beach Areas. Terrain may be Flooded Well Inland. Examples Hugo 1989 and Donna 1960

29 Saffir/Simpson Hurricane Scale Category 5 Hurricane Winds 156 mph and up (135+ kt) Complete Roof Failure on Many Residences and Industrial Buildings Some Complete Building Failures with Small Utility Buildings Blown Over or Away Flooding Causes Major Damage to Lower Floors of all Structures Near the Shoreline Massive Evacuation of Residential Areas may be Required Examples Camille 1969

30 Evaluation of Wind Damage Evaluation of Wind Damage Velocity Pressure Pressure Coefficients Exposure Factor Orientation of Component Failure Impact Damage

31 Wind Pressure Distribution Wind pressure at the roof is greatest on the leeward side Wind pressure is compounded on the windward porch Internal pressure applied to all interior surfaces

32 Wind Pressure Distribution Wind pressure at the roof is greatest at corners Wind pressures in the figure represent suction forces The lowest wind pressures occur in the field of the roof

33 Wind Pressure Distribution

34 Evaluation of Wave Damage Evaluation of Wave Damage Determination of Water Height Hydrostatic Pressure Wave Forces Debris Impact Orientation and Magnitude of Wave Damage

35 Storm Surge Forecasts

36 Storm Surge Forecasts

37 IPET Water Surface Elevation Map

38 FEMA Surge Inundation Map

39 Indicators of Maximum Water Height

40 Floating Impact Damage

41 Wind and Water Damage

42 Damage Due to Buoyancy

43 Storm Surge Damage

44 Floating Impact Damage

45 Flooding in Downtown New Orleans

46 Storm Surge Damage

47 Balancing Insureds and Insurers Interests I. Duty of Good Faith and Fair Dealing to Insureds II. Insurer s Rights to Investigate Fraud and Coverage and to Avoid Overpayment of Tenders

48 Questions and Answers