| Dickstein Shapiro LLP Webcast | The Impacts of Superstorm Sandy How to Maximize Insurance Recovery for Your Business


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First-party policies are a valuable asset that can help your business recover from loss caused by natural disasters such as Superstorm Sandy. In this one-hour webcast moderated by a leader in New York's Building Owners and Managers Association, experienced insurance coverage attorneys and a leading insurance claims financial consultant will address the following topics to help you preserve and maximize insurance recovery:

Coverage for lost or damaged property;
Coverage for costs incurred to minimize damage or loss in advance of the storm;
Recovery of lost business income as a result of damage to your company's property;
Recovery of lost income as a result of damage to the property of your suppliers, vendors, or customers;
Coverage for lost income caused by evacuation orders;
Critical steps to preserve your right to insurance-including when and how to provide notice of the claim to the insurer;
Practical considerations to help document, quantify, and prove your claim to the satisfaction of the insurers; and
When to engage an expert to help assess loss and calculate damages.

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  1. 1. Insurance Recovery for Superstorm Sandy-Related LossesSustained by Businesses and Communities in the Tri-StateAreaNovember 2012Insurance for Property Damage and Business to conduct business (either at all or at the sameInterruption Losses levels as before); the extra expenses incurred in dealing with the effects of a disaster, includingBy all accounts, businesses and communities in expenses incurred in advance to minimize anyNew York, New Jersey, and Connecticut damages and losses; and the costs incurred insuffered crippling storm-related damage in the establishing the extent of the losses.aftermath of Superstorm Sandy. Businesses maybe severely damaged, with some unable to Scope of Losses and Coveragereopen for months, if at all. Other businesses It is critical that policyholders assess as quicklymay face enormous financial losses even as possible (i) the extent of their losses andwithout suffering any physical damage because (ii) the scope of coverage for those losses.of power outages, evacuations, halted public Insurers will seek detailed proof of the losstransportation, and government shutdowns or claimed under the policy and documenteddamage to facilities of key suppliers or evidence of the expenses incurred in respondingcustomers. In addition, municipalities may to that loss. Policyholders will need toexperience decreased tax revenues due to understand fully the scope of coverage affordedbusiness closures. Thus, the economic impact of by their policies in order to maximize thestorm-related losses for businesses and potential for recovering all covered losses.municipalities combined will be in the billionsof dollars. At least one forecasting firm predicts Policy Conditions and Requirementsthat Superstorm Sandy will cost $60 billion. As Policyholders should be wary of potential timebusinesses and communities seek to rebuild, traps in their policies. For example, a policy maytheir financial needs will be tremendous. obligate the policyholder to provide the insurerMany businesses and municipalities may have a with notice of a loss “as soon as possible” or “asvaluable resource available in the form of soon as practicable” after a loss or other insuredproperty insurance that can play an important event. Some policies require that notice be givenrole in helping them recover from this disaster. in as little as 30 or 60 days. The consequences ofThis insurance may provide coverage not only failure to give prompt notice differ, but a failurefor physical damage to and loss of property, but to give prompt notice may completely bar aalso for: financial losses arising from an inability policyholder’s claim.© 2012 Dickstein Shapiro LLP. All Rights Reserved. Because of the variations in policy language, this alert does not address all issues. It alsodoes not replace, and should not be relied on instead of, legal advice. However, it does provide a starting point and serves as an aid inunderstanding the maze of factual and legal issues regarding insurance. This alert may be considered advertising in some states.
  2. 2. Property Insurance Policies Utility Service Interruption: provides coverage for losses that the policyholder incurs due to theInsurance for storm-related losses can be interruption of utility services that result fromprovided under several different types of physical damage to the property that supplies theinsurance policies, but the most common are utility. For example, if a storm results in yourfirst-party property policies that protect a business losing electrical service, and yourpolicyholder’s place of operations and inventory business then incurs losses because of theand provide coverage for lost or damaged interruption of service, you could make a claimproperty. Many property insurance policies are under this coverage. This coverage usually issold on an “all risk” basis, meaning that they provided through an endorsement to a propertycover losses to real property caused by any peril policy and may require that the interruption ofnot expressly excluded. Because of the breadth service have lasted a minimum amount ofof coverage afforded by an “all risk” policy, time—usually 24 hours. Utility Serviceonce a policyholder shows that it has suffered a Interruption coverage also can vary widely withloss, the burden of proof shifts to the insurer to regard to what types of utilities are that the loss is not covered. Bycomparison, a second type of property Civil Authority: protects the policyholder frominsurance—a “named peril” policy—covers only losses caused by the inability to access itsthose perils expressly listed. Because both types premises when a civil authority denies suchof policies may contain exclusions to coverage, access because of covered damage to, orit is important for a policyholder to carefully destruction of, property belonging to thirdreview all aspects of a policy to determine if parties. Some civil authority coverages requirecoverage for the specific loss is clearly physical damage to the policyholder’s ownexcluded. premises—others do not. A “civil authority” for purposes of this coverage may extend beyondAdditional Coverages, Including Business federal and state governments. For example,Interruption and Extra Expense after the 9/11 terrorist attacks, someIn addition to covering property damage, many policyholders successfully argued that theproperty policies also provide some or all of the baseball commissioner’s cancellation of gamesfollowing coverages designed to help the constituted an order of a civil authority.policyholder recover for other losses caused by Ingress/Egress: protects the policyholder againstthe storm: lost business income and extra expense when theBusiness Interruption: reimburses the policyholder’s premises are inaccessible forpolicyholder for the profits (i.e., the amount of reasons other than an order of civil authority.gross earnings minus normal expenses) that the This type of coverage typically requires that thepolicyholder would have earned but for the property damage be located within a certaininterruption of the policyholder’s business. radius of the policyholder’s premises. SuchBusiness interruption coverage generally coverage may be implicated if, for example,requires that an “interruption” result from roads or public transit providing access to adamage to covered real or personal property. policyholder’s premises are closed and there isPolicyholders, for example, have obtained also property damage in the premises’reimbursement under such coverage when immediate area.widespread disasters such as Hurricane Katrina Contingent Business Interruption: protectsand the 9/11 terrorist attacks caused business against economic losses caused by the inabilityinterruption. of the policyholder to receive a supplier’s goods or services or the policyholder’s inability to 2
  3. 3. supply goods or services to customers, thereby Other Coveragespreventing the policyholder from producing Policyholders should remember to look beyondand/or selling its product in the marketplace. the coverage provided under the ordinaryExtra Expense: indemnifies the policyholder for “property policy,” to coverage that may bethe reasonable and necessary increased costs of provided under other policies, such as thoseconducting its business operations due to providing insurance for “environmental,”property damage caused by an insured peril. One “maritime,” and “warehouse” losses. Liabilityexample of such expense would be costs policies also may be implicated if, for example,incurred in the installation and maintenance of a third party files a lawsuit alleging propertyelectric generators so the company can continue damage or bodily injury due to overflow from ato do business while awaiting restoration of sewage treatment plant or municipal facility. Itelectric service from public utilities. is important for a policyholder seeking to obtain insurance recovery to review all of its insuranceInsurer Defenses to Coverage policies to determine the extent of its coverage.When a policyholder makes a claim for Obtaining and Maximizing Insurancecoverage, insurers may raise challenges to the Recoveryavailability of coverage. For example, theinsurer may assert that an exclusion, such as the Pursuing an insurance claim following a disaster“flood” or “water” exclusion, bars or limits often is a complex and challenging process,coverage. The “flood” or “water” exclusion may especially when management and employees arebe very broad so as to include loss due to flood, faced with post-disaster challenges both at workmudslide, and other types of water damage (e.g., and at home. Policyholders should considersewer backup or seepage). A common dispute obtaining the assistance of coverage counsel,with regard to the application of the “water” because there are many issues that canexclusion arises when a policy covers one significantly affect the existence or amount ofcommon cause of loss (e.g., wind) and excludes recovery under an insurance policy. Foranother (e.g., flood). Whether an exclusion example, certain causes of loss may be excludedapplies to a loss may depend substantially on from coverage, while others are not. Resolutionwhat the cause of loss is determined to be, of that issue may depend not only on the law ofparticularly when damage can be caused by a particular state that will be applied and themultiple forces such as wind or floods, as is facts presented by a claim, but also on the waycommon with natural disasters. The question of in which the facts are presented to the insurancewhich exclusions may apply also will depend in company or, ultimately, to a court, if insurancepart on the wording of the exclusions and the litigation is necessary. An attorney may be ableapplicable state’s law. to analyze how the resolution of these issues will impact insurance recovery and help theCompanies should not assume that insurer policyholder present its claim in a way thatdefenses will necessarily defeat coverage. Each maximizes protection under the insurancepolicy requires a careful analysis, based on the policies in light of the coverage issues.specific policy language involved, the facts of acompany’s particular losses, and the law of the The following is a checklist of important factorsapplicable jurisdiction. Careful advance to consider when analyzing a potential storm-planning is suggested, if time permits, before related insurance claim.any claim is made to the insurer. 3
  4. 4. Checklist: Insurance-Related Steps to Take to company to determine if there is anyMaximize Coverage language releasing or giving up any claims. Consider and locate all possible insurance  Follow up with your insurance company policies that may be implicated by your loss; regarding your claim. if you cannot find them, then request a copy  Seek legal advice as appropriate. from your insurance agent or broker. Our Firm Check your policy to locate the address to which any written notice is to be sent and Dickstein Shapiro LLP exclusively represents provide written notice of your loss to your policyholders in coverage disputes. Firm insurance company. attorneys have successfully resolved some of the most significant coverage cases in the country. Document property loss or damage, to the Since the beginning of 2007, our insurance extent possible, by photographing, coverage attorneys have recovered more than videotaping, and preparing an inventory of $5 billion on behalf of policyholders in matters damaged or lost property (check with your involving a wide range of coverage types, insurance agent or broker for particular forms claims, and industries. Firm attorneys have that should be used for the inventory). handled many disaster-related coverage matters, Keep receipts for all expenses incurred to including those related to Hurricane Katrina and protect or repair your property and for any 9/11. Dickstein Shapiro also works extensively additional or extra expenses. on matters involving the Federal Emergency Management Agency (FEMA) and has the Provide your insurance company with a list of ability to interface directly with key decision all expenses and determine if advance makers at FEMA. This allows for a more approval is required before incurring any comprehensive pursuit of any claims that may expenses. involve programs administered by FEMA. Review your policy to determine if there are Contact Information any procedural requirements or deadlines. To the extent possible, comply with all We would be happy to further discuss with you requirements and deadlines. the insurance implications for disaster-related loss. For more information, please contact: Submit proofs of loss and other documents and submit to an examination under oath if John E. Heintz required by the policy to obtain coverage and (202) 420-5373 payments from the insurance company. Washington, DC Request partial or advance payments from your insurance company as needed. Thomas J. Freed Keep notes of written and oral (203) 905-4529 communications with your insurance company, agent, or broker, including the Stamford, CT dates and times of the conversations and the Jared Zola people with whom the conversations (212) 277-6684 occurred. Review checks, payments, and other written New York, NY communications from your insurance 4