N.C. Appellate Court Sides with Insurer in Denying Pre-Storm Coverage

An insurance company legally denied coverage to a business seeking to renew its policy in the days before Hurricane Isabel struck North Carolina, the state’s Court of Appeals ruled Aug. 15.

HPB Enterprises, the owner of a waterfront community on Albemarle Sound, unsuccessfully tried to resume its insurance Sept. 15, 2003, just three days before Hurricane Isabel slammed in to the North Carolina coast, damaging 53,000 homes.

As is often the case in anticipation of hurricanes, the North Carolina Insurance Underwriting Association implemented a policy on Sept. 14, 2003, that declined any “new or increased coverage” until Hurricane Isabel had passed. The state insurance department approved that plan.

HPB Enterprises suffered property damage during the event and appealed the insurer’s decision to deny coverage, arguing that the business should have been able to renew its coverage, which had expired at the beginning of August. Resuming the policy should not be considered “new or increased coverage,” attorneys for HPB argued.

However, the Court of Appeals sided with the agency’s appeals committee, the state insurance department and a trial court, all of which said that the renewed coverage was blocked under the insurer’s hurricane policy.

“Contrary to (HPB Enterprises’) assertions, it had no automatic right to continue an expired policy by submitting the proper application and paying the premiums,” wrote Judge Rick Elmore in the unanimous decision.

Attorneys from both the insurance association and HPB Enterprises did not return phone calls seeking comment.