February 20, 2020 Articles

Commercial Insureds’ Claims Under All-Risk Policies Following Catastrophic Storm Events

Do flood exclusions and flood sublimits bar or reduce coverage?

By Ellis I. Medoway

With climate change comes extreme weather, which has led to catastrophic losses by insured businesses. Two such catastrophic weather events are Hurricane Katrina in 2005 and Superstorm Sandy in 2012. Several commercial insurance coverage actions ensued from the substantial losses sustained in those storms. Depending on the commercial insured’s first-party “all-risk”[[1]] policy language, some insureds successfully litigated the coverage issues involved and, more particularly, whether the policy’s flood exclusion and flood sublimits bar or limit the coverage that may be available. This article discusses some of the commercial coverage cases that resulted from these severe weather events. As is typical in most coverage disputes, the court’s coverage determination in each case largely turned on the policy’s language and which state’s law was applied.

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