Hurricane Ida made landfall in southern Louisiana on August 29. Although the storm has passed, the shutdown of construction projects and damage to job sites may cause additional costs and delays. The clock is ticking to submit your notices on any delay and cost claims, as well as insurance claims.
Depending on your construction contract, Hurricane Ida likely qualifies as a force majeure event. A force majeure clause refers to “certain circumstances and events that are recognized as being above and beyond the control of contracting parties and that could not reasonably have been foreseen or avoided by the due care of either of the parties.” See William Cary Wright, Force Majeure Delays, Construction Lawyer, Fall 2006 (ABA Forum on Construction Law), at 33. Generally, a force majeure event may allow for an extension of time, but typically does not allow for the contractor to recover any losses or damages that will result in the delay of work. Id. There may be a claim for force majeure under the general provisions of the AIA A201 and Louisiana contract law.
Now is the time to review your contracts, Builders Risk and First Party Property insurance policies to determine your notice and documentation requirements for claims. Most contracts have clauses detailing the requirements for notice of claims that spell out the requirements for submitting a notice.
For example, the AIA defines Notice as a “writing to the designated representative of the party to whom the notice is addressed and shall be deemed to be duly served if delivered in person, by mail, by courier, or electronic transmission if a method for electronic transmission is set forth in the agreement.” See AIA Document A201-2017. Notice should be sent to the other intended party (i.e., contractor or owner) and the Initial Decision Maker with a copy sent to the Architect, if the Architect is not serving as the Initial Decision Maker. See AIA Document A201-2017 Section 22.214.171.124. As set forth by the AIA, there are three main requirements to note: (1) the notice must be in writing; (2) electronic transmission notices are not automatically available unless agreed upon in the contract; and (3) notice must be provided to the Architect.
Additionally, you must track and keep a record of all cost and time delay related to the hurricane. A detailed record will help substantiate an increase in the contract sum and an extension of the contract time. It may be necessary to reserve your right to determine the effects of the delay at a later date when more information regarding the additional time and increased contract sum can be substantiated.
Regarding insurance issues, Louisiana Insurance Commissioner Donelon has issued Directive 218, which orders all insurers to honor reimbursement of reasonable expenses incurred by insureds who filed loss of use claims as a result of having to evacuate from Hurricane Ida. September 2, 2021 Release. Further, Bulletin 2021-07 requests that insurers interpret provisions for coverage favorably regarding evacuation orders in regard to policyholders. Commissioner Donelon stated, “I urge insurers to not use lack of a mandatory evacuation order to deny policyholders coverage for their evacuation expenses.” September 3, 2021 Release.
The Louisiana Department of Insurance offers the following pertinent recommendations on preparing to file a claim:
- Contact your insurance agent or company as soon as possible and have your policy available.
- Minimize your losses, document the damage with photographs, make reasonable temporary repairs as needed and keep receipts for the repairs.
- Know that flooding is generally not covered under homeowners and renters insurance policies. Flood insurance is generally a separate policy.
- Keep all receipts.
- Ask for proof of identification from any agents, adjusters or contractors and don’t sign contracts for repairs until you have been instructed to do so by your adjuster and have done your due diligence to check the license, insurance and reputation of a contractor you are considering hiring. September 2, 2021, Release.
We also recommend that when you contact your insurance agent, in addition to putting your agent / insurer on notice of the claim, documenting damages, and keeping receipts / invoices, you should find out what else you need to do to preserve your rights under your insurance policy. In certain circumstances, contacting your attorney to review your policies and advise you may be necessary to preserve your rights and assist in resolving any disputes with your insurer.
The Louisiana Department of Insurance further recommends that if you are facing expenses from Hurricane Ida that are not covered by insurance, you should apply for Individual Assistance through FEMA.