Article
Article
03.01.15
A version of this article originally appeared in Surviving the Storm, March 2015, a Bay Area Council publication.
Superstorm Sandy provides a useful but sobering preview of the types of insurance and risk management issues that business and residents face given the prospects of a catastrophic storm. The 2012 storm began life as a hurricane and was still potent when it made landfall in a very populated area; Sandy caused $68 billion of damage. Similar storms can occur on most seacoasts worldwide, whether from single hurricanes, from tsunamis, or simply from unrelenting heavy weather patterns that overwhelm levees and other existing protections.
Exclusions, sublimits and other coverage terms relevant to certain types of natural disasters can have a major impact on policyholder recovery after a storm. Businesses and homeowners think of policies as an off-the-shelf product, but there is a great variety of coverage restrictions and expansions that may be present or that can be shaped.
The Bay Area Council Economic Institute and other organizations recently published a report entitled Surviving the Storm, which detailed the risks to the San Francisco Bay Area from sustained winter storms. Severe storms crossing from the mid-Pacific Ocean to the Western coast of North America, along the original so-called “Pineapple Express,” have inundated California in the past (notably in 1862) and are expected to recur. It is perhaps incongruous that the report has been issued in the midst of an epic drought in California, but the planning and protection for such an event are overdue.
In connection with the Bay Area Council report, insurance litigator Robert Wallan and infrastructure development lawyer Rob James of Pillsbury Winthrop Shaw Pittman LLP identified for insureds the following issues that have been hotly contested in the wake of major storms.
What steps can be taken to address these issues in advance? Have your insurance reviewed and updated as needed. Property, business interruption or other forms of insurance coverage vary significantly from company to company and change over time. Evaluating existing or prospective coverage in light of these issues allows insureds to be better prepared and protected in case of a major weather event.
Download: Are You Covered for a Superstorm?