Today the New York Law Journal published “Businesses Damaged by Sandy Face Knotty Insurance Issues,” an article by Christine Simmons which explores business interruption claims, as its title indicates, and also gives an overview of the coverage issues for homeowner claims that have arisen in the aftermath of Hurricane Sandy.
A number of New York insurance lawyers are quoted in the article about the types of problems they have personally observed in the past weeks. The consensus among them is that the fight between insurers and policyholders has been and will continue to be over whether damage was caused by flood or wind, or a combination of both.
A problem for policyholders will be anti-concurrent causation clauses, which say that if damage is caused by both a covered and non-covered peril, the latter dominates and there is no coverage. If damage is caused by wind and flooding, with the former being covered, these clauses will serve as the basis for insurance company disclaimers. There has been talk about New York possibly banning these clauses which would be a fantastic development in the state’s insurance law.
To all readers – send a letter to your Senator, Congressman, state senator and state assemblyman asking them to support a ban on these anti-consumer clauses.
For policyholders who have suffered damage, it is critical that it is not considered to be due to flooding, which will prove fatal to any claim made under a typical homeowner’s policy. Only flood insurance covers flood damage, and about 70% of New Yorkers in flood zones are without that coverage.
Finally, regarding business interruption coverage, the article notes that commercial policies may provide coverage where there is a loss of business income due to governmental orders, such as curfews or evacuations, and that “contingent business interruption” coverage may provide a benefit for loss of business due to a physical loss to the property of a customer or supplier.