Earthquakes, Floods, and Disasters Near and Far: Policyholders Should Look For Cover In The Coverage

Earthquakes, Floods, and Disasters Near and Far: Policyholders Should Look For Cover In The Coverage

  By Sherilyn Pastor, Ira Gottlieb, and Nicholas M. Insua, Attorneys, McCarter & English, LLP

The recent devastating and tragic earthquake in Japan and flooding in the northeastern United States should serve to remind businesses of the ever-present need to consider their insurance policies as a source of some modicum of relief.  In our shrinking world, with global supply chains and interdependent economies, such events have a substantial impact on the operation of businesses, including the delivery of goods and services that are vital to their financial well-being.

This commentary briefly addresses several types of coverage, what they generally insure, and what to look for and think about when bringing a claim that may arise in the wake of a natural disaster.  In particular, the commentary discusses several types of coverage typically found in a first-party property insurance policy, including property damage, business interruption, extra expense, extended business interruption, contingent business interruption, leader property, civil or military authority, service interruption, and ingress/egress.

Policyholders facing losses will need to scrutinize their policies closely.  As the authors state:

The most important first step for any policyholder is to gather and read all of its insurance policies and then, if appropriate, to notify their insurance carrier of the loss or potential loss. Coverage might be found in obscure forms, words and terms might be unclear, conditions might need to be complied with in great haste, and exclusions could limit or completely preclude any recovery.

The commentary provides useful insights on what types of insurance might be available for losses associated with these recent tragedies. Businesses insure themselves to cover such potential risks and losses, and many kinds of insurance policies and forms, which are basic to a first-party property insurance policy, might provide relief to defray the extraordinary costs that often attend such devastating losses.

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Sherilyn Pastor and Ira Gottlieb are partners, and Nicholas M. Insua is a senior associate with McCarter & English, LLP's Insurance Coverage & General Litigation Group. Ms. Pastor is the Practice Group Leader and a member of the firm's Executive Committee. Mr. Gottlieb, Ms. Pastor and Mr. Insua counsel policyholders on a wide range of issues and have recovered billions of dollars, by settlement or judgment, on behalf of policyholder clients.

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