A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

In the wake of Hurricane Sandy approximately 3,000 complaints have been made to the New York State Department of Financial Services, the administrative agency that oversees the business of insurance in the state.

Addressing members of the State Assembly in Albany, Superintendent Benjamin Lawsky, the top insurance regulator in New York, conveyed that this indicates a problem with the way insurance companies have dealt with the catastrophic damage caused by the storm.

Mr. Lawsky recommended that there should be an effort to make property and homeowner insurance policies more uniform in their terms and easily understandable to the general public. He even mentioned that it would not be surprising if many Assembly members did not completely understand their own insurance policies. In fact, 50 percent of affected homeowners in flood areas did not have flood insurance. Certainly, many nevertheless thought they would be covered in the event of a storm like Sandy.

Mr. Lawsky noted that the top complaints that the Department feels are legitimate concern speed and response time, mortgage-holders retaining payments for too long of a time period, and the utilization of anti-concurrent causation clauses.

For those unfamiliar with those clauses, they allow insurance companies to deny a claim where it was caused by an event that falls under a coverage exclusion, no matter if the predominant cause of the damage is covered under the policy. For instance, if flooding is not covered, but wind damage is, the insurer can deny coverage even if flooding was a minor cause of the damage.

Assembly Speaker Sheldon Silver, commenting on these clauses, noted that “there is something inherently unfair” with their application and inquired about whether regulations could be implemented to eliminate their inclusion in policies. In response, Lawsky said he had to check, and sounded caution about implementing changes in the wake of Hurricane Sandy that might not be suitable for other situations.

One hopes that regulations will be implemented. These clauses are nothing more than insurers limiting their responsibility to policyholders. Policyholders do not get an opportunity to negotiate terms of coverage with their insurers, and that aside, most are not aware of the impact of these clauses not to mention that they are even contained in the policy. However, when they suffer from property damage and make a claim, they can be in for a rude awakening when it is denied on this basis. Anti-concurrent causation clauses are sinister and should be eliminated.

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