In the Wake of Sandy

Insurance claims for property losses caused by post-tropical cyclone Sandy might have been easier if Hurricane Irene hadn’t hit the East Coast just a year before. Hurricane Irene left $10 billion in damages in her wake.  Many homeowners’ insurance policies saw drastic changes after Irene, whether or not the homeowner filed any claim. In addition to escalated rates, many new policies included wind and hurricane exclusions and deductibles.

Other insurance companies included “anti-concurrent causation clauses,” which deny coverage for damage resulting from multiple causes when one cause is covered and the other is not.

Flood insurance, a prerequisite for most mortgages, now requires insurers to use federal data to allocate costs where a home is totally destroyed by flooding and other causes, so that the homeowner has recourse if there are multiple causes. Sandy is putting these new provisions to a practical test.

Homeowners should be careful when speaking with insurance claims adjusters, because a characterization might be used later to disqualify a claim. With initial estimates of property damage and business interruption exceeding $50 billion, homeowners and business owners might see a long and complicated claims process. It isn’t necessarily bad faith, but the sheer number of claims that will be filed. With Congress balking, authorizing a first increment of only $9.7 billion, the claims process might be further delayed for lack of funds.

4,451 FEMA personnel were deployed in the wake of the storm and over 500,000 assistance claims were registered.

In all, 8.1 million homes lost power in outages affecting 17 states.