Weather Claims and Bad Faith in the Face of Climate Change

Sharp increases in weather claims—from water to fire to ice—are undeniable. In 2024, 27 confirmed weather disaster events in the U.S. that caused losses exceeding $1 billion each.

The types of events included drought, flooding, severe storms, hurricanes, wildfires and winter storms. An Arctic blast from December 2022 to January 2023 caused a 428% increase in freeze claims and 150% increase in flood claims over same period in the prior year, a Verisk report shows. Through mid-August 2025, more than 44,000 wildfires had been reported and had burned over 3.7 million acres. The damage from 2024’s Hurricane Helene was felt far inland in Georgia and South Carolina and hammered an unsuspecting western North Carolina, including Asheville. According to Swiss Re, in 2024, $137 billion of $318 billion (43%) of economic losses globally were insured.

With people and businesses left devastated by weather disasters, claims decisions by insurers are closely scrutinized.

Recent Weather-Related Coverage Decisions
In Doxey v. Aegis Security Ins. Co., the insured submitted a claim for property damage caused by wind from Hurricane Laura. The policy contained an anti-concurrent causation clause, which excluded coverage for damage “caused by, contributed to or aggravated by” flooding. Aegis denied coverage on the grounds that the covered structures were damaged by wind but then completely displaced and destroyed by a subsequent storm surge. The insured argued that under Louisiana law, an anti-concurrent coverage provision does not exclude coverage when the exempt cause occurs after the covered peril. The insured submitted an affidavit from an engineer regarding the 140 mph to 150 mph winds and the likely effects on the house before the storm surge. The engineer concluded that “the hurricane wind is the efficient and proximate cause of the total loss.” The court denied cross-motions for summary judgment, finding a genuine dispute of material fact as to whether the storm surge in any way caused or contributed to the loss.

In Frymire Home Services, Inc v. Ohio Security Insurance Company, an insured claimed that the roof of its commercial building was damaged in a hailstorm. The insured’s public adjuster provided a declaration that the loss was caused only by hail. The policy contained exclusions for cosmetic damage and wear and tear. The district court granted summary judgment in favor of the insurer, finding that the insured’s loss involved concurrent causes because the roof had some preexisting damage and that the insured bore the burden of establishing what damage was caused by a covered cause of loss. The Fifth Circuit asked the Texas Supreme Court to consider whether the “concurrent cause doctrine applies where there is any non-covered damage, including ‘wear and tear’ to an insured property, but such damage does not directly cause the particular loss eventually experienced by plaintiffs.” The same questions were certified in Overstreet v. Allstate Vehicle & Prop. Ins. Co. In both cases, the matters were resolved before the Texas Supreme Court decided the issue.

These cases illustrate that, particularly in weather related events, insurers must carefully evaluate whether an anti-concurrent causation clause applies, particularly if the insured presents evidence that a covered peril independently caused the loss before the excluded peril occurred.

Another issue that arises from weather-related claims is the extent or existence of property damage. In Windridge of Naperville Condo. Ass’n v. Philadelphia Indem. Ins. Co., an insured suffered hail damage to the aluminum siding on the south and west sides of certain buildings. The siding had been discontinued, so the insured sought the cost to replace the siding on the north and west sides of the buildings. The court found that the insurer was required to replace the siding on all four sides of the building in order to make the insured whole.

In Hartford Ins. Co. of Midwest v. Mississippi Valley Gas Co, in the context of business income losses, the 5th Circuit held that “mere monetary losses” are not covered when a policy requires physical damage coverage because the policy requires “physical damage.” The court held that “[t]he requirement that the loss be ‘physical,’ given the ordinary definition of that term is widely held to exclude alleged losses that are intangible or incorporeal, and, thereby, to preclude any claim against the property insurer when the insured merely suffers a detrimental economic impact unaccompanied by a distinct, demonstrable, physical alteration of the property.” Mississippi Valley Gas Co. was decided during COVID-19 and precluded coverage for business losses associated with the pandemic. However, the principle may equally apply to cases in which, for instance, weather causes no property damage, but utilities are interrupted, preventing a business from opening.

Preventing Bad Faith Claims

Generally, claims of bad faith allege delay, improper claim denial, insufficient investigations or insufficient communication. Insurers should ensure that a sufficient number of claims adjusters are assigned to an affected area so that the company can timely respond to queries about claims. For each claim, it is imperative to document efforts to contact the insured, even if unsuccessful, including efforts to schedule inspections. The claim file should reflect what inspections are performed, even if such inspections are virtual. Similarly, the undisputed amount of a claim should be paid promptly.

An insurer should not forget the importance of retaining experts when appropriate. In Raison D’Etre Bakery LLC v. Mass. Bay. Ins. Co., an insurer relied upon a forensic accountant when calculating a business income loss. Although a genuine dispute of material fact existed regarding the amount of the loss, the insurer defeated a claim for bad faith because the independent accountant provided a reasonable basis for its opinion. Other courts have decided similarly. In Haezebrouck v. State Farm Mut. Automobile Ins. Co., the court held that an insurer’s denial of a claim for payment is reasonable when based on an independent consultant’s opinion. In weather-related claims, hiring an engineer to evaluate the cause of loss may not just be necessary to fully investigate the loss, but it may also insulate the insurer from a bad faith claim. Critically, the insurer’s expert should consistently be instructed to provide an independent assessment.

Weather-related claims are on the rise. The same claims handling practices that govern nonweather claims are amplified in weather-related claims. Insurers should communicate clearly and timely with insureds and enforce the terms and conditions of the policies and applicable law in the jurisdiction. Where appropriate, an expert opinion may be particularly helpful to resolving the coverage issues that are often raised in weather-related claims.

Strickland, a partner at law firm Swift Currie in Atlanta, defends insurance carriers, as well as insured businesses and individuals, in coverage disputes, commercial litigation, premises liability and commercial transactions that involve nuances or special complexities. Email: rebecca.strickland@swiftcurrie.com.