Hurricane Sandy: Courts Begin Issuing Insurance Rulings

In October 2012, Hurricane Sandy charged up the East Coast pummeling everything in its path and leaving behind massive damage to commercial and residential properties. Whatever the specific cause of the damage, property owners collectively understood that Sandy had caused staggering losses. After submitting claims for these losses to their insurers, however, many insureds learned that the specific cause of the property damage would be critical to determining whether insurance coverage would be available and whether any such coverage would be severely limited. As a result, in some cases, insureds argued that damage was not caused by flood waters, in order to avoid flood exclusions or to evade special flood-related deductibles or sublimits. In other cases, insureds found themselves making creative arguments to satisfy policy requirements that there be physical damage to establish a covered loss. Over the last several months, courts have begun to hand down decisions resolving these insurance disputes. In this article, SRZ partner Howard B. Epstein and special counsel Theodore A. Keyes review the impact that policy provisions concerning flood and water damage and physical damage requirements have had on insurance disputes concerning Sandy-related claims.