Insurance may not cover hurricane damage from oil contaminated water

TAMPA, Fla. - Hurricane damage? Check. Sinkholes? Check. Oil spill damage? You better check. Your home owner's insurance policy in Florida may not cover, or even address getting slimed by the BP oil spill.

Chip Merlin of the Merlin Law Group in Tampa predicts many insurance carriers will refuse to absorb the losses associated with the sticky, smelly oil approaching our shores.

A report from Bankrate.com listed some unpleasant surprises that may bubble up along with the oil.

The standard $10,000 dollar pollution cleanup provision may not apply.
"As a naturally occurring substance that hasn't been refined at all, crude oil itself might not be a pollutant under the policy," Merlin explains.

Roadways, land, pavement and foundations are defined in many policies as "property not covered".

Should a hurricane push oil onto your property, the insurance company would likely deny claims under the argument that storm surge damage falls under flood insurance, an insurance many people do not carry.

Chris Wandembergh of First Heritage Insurance of Tampa strongly recommends adding flood insurance even if you live away from the beach.
"I would urge people to go and get flood insurance – immediately," Wandembergh said.

The National Flood Insurance program has already decided to cover the additional damage that oil contaminated water might cause as they did in the wake of Hurricane Katrina in 2005. But home owner's policies without flood insurance will leave them responsible. However, insurance attorney Chip Merlin of Tampa says BP will be responsible for such damage and will ultimately pay.

Merlin's concern is that enormous areas of residential property could become contaminated if a hurricane pushes oil tainted water far inland.

"The vast majority of policies don't cover the land", Merlin said.