After Hurricane Georges hit Puerto Rico in September 1998, many policyholders considered their claims unfairly denied because of the ambiguous language of their policy. The main issue was that the policy did not have a specific deductible language for hurricane damage. If the insurance companies did not have a specific deduction claim for the hurricane, the insurance companies would apply the deduction deduction for wind damage, but in certain claims they used the deductible classified under "basic damage". Many of the insurancers filed complaints in the Insurance Committee's office against the insurance companies for the ambiguity in the language related to the deduction charge for hurricane damage. Some of these cases were then appealed. Below is what the Court of Appeals in Puerto Rico held in United Surety & Indemnity Company v. Insurance Commissioner of Puerto Rico 1
Policyholders notified the Commissioner of Insurance for this ambiguity issue, as they understood that the insurance companies should apply "basic deduction" on their declaration page if the hurricane deductible is not stated and thought it was unfair to apply its pretext to deduct its wind storm  phenomenon . The Department of Investigation at the Insurance Committee's office began investigating the United Surety & Indemnity Company (USIC), a company that used wind storms that are deductible for hurricane damage. They concluded that the USIC had to evaluate the claims filed by policyholders. Their conclusion was based on the fact that the controversy in their complaints was not only limited to determining whether wind storms and hurricanes were synonyms, but that the declaration of page language has not changed in a way of equal treatment for all events that can be considered a hurricane. In their conclusion, they emphasized the difference between a hurricane and a windstorm that says:
Although winds are less or more in a windstorm and in a hurricane, they are not the same phenomenon and are completely discernible … A windstorm has been defined as On the other hand, a hurricane is considered more like a "storm with violent wind, especially a tropical cyclone in the Caribbean." " 3
The USIC then filed an administrative review in the Appeals Court against the Office of the Insurance Commissioner and their defense was that there was no obscurity and that the deduction goods were properly applied based on the logical interpretation of the word" wind storm "applicable to all phenomena related to extraordinary wind power that can cause damage, and that includes the hurricane, and therefore the terms wind storm and hurricane are synonyms.
The Puerto Rico Supreme Court has held that: the norm is that an insurance contract is amenable to two interpretations, and the court should use 4 Puerto Rico's insurance rules state:
All insurance contracts shall be interpreted globally, based on the sum of its terms, as expressed in the policy and per reinforcements, extensions or modifications, approvals or requests followed the policy and that is part of it. 5
In this case, the police had cyn an approval that amended the deductible clause stated on the declaration page which stated:
we pay only that portion of any loss that exceeds the percent of the wind power deduction provision, hurricane or hail stipulated above, in the case of direct physical loss to property covered of this policy caused by a windstorm, Hurricane or Hail.
The Court of Appeal concluded that this approval in its entirety supersedes the deductible clause stated on the policyholder's declaration page. The Appellate Court affirmed the Insurance Committee's finding that, because of the omission of the specific percentage deductible that should be applied to hurricane damage, the most favorable would apply to the insured, and in this case the basic deduction for $ 250.00 and not the $ 500.00 $ deductible for wind storm.
Today, twenty years later, this interpretation may differ in some jurisdictions and consider that windstorm damage is synonymous with hurricane damage. However, jurisdictions would still agree on where there is ambiguity in an insurance contract, it should be interpreted in favor of the insured.
1 United Sur. & Indem. Co. v. Commission of Seguros de Puerto Rico 2004 WL 1181427 (TCA).
2 Webster's Encyclopedic Unabridged Dictionary of English Language New York, Gramercy Box, 1989, page 1636.
3 https://www.lexico.com/en / definition / hurricane, retrieved June 25, 2020.
4 Leon Ortiz v. Comisión Industrial 101 DPR 781, 787 (1973).
5 Article 11.250 of the Puerto Rico Insurance Act, 26 LPRA Section 1125.