Insurance Coverage Issues
Arising from
Superstorm Sandy
By Finley Harckham and Dennis J. Artese
T
he devastation left in the wake of Superstorm
Sandy was unprecedented in the Northeastern
United States. There were widespread power
outages affecting approximately eight and half million customers. In anticipation of the storm, governors and other officials declared states of emergency and issued mandatory evacuation orders. Major
highways, bridges and public transportation were
closed in New York, New Jersey and other areas. It
has been called the worst disaster in the 108-year
history of the New York Metropolitan Transportation Authority.
Each of these events has important implications
for coverage under commercial property insurance
policies. Like many natural disasters that preceded
it, Superstorm Sandy has given rise to a number of
unique and important commercial property insurance coverage issues. Nearly a year and half after
14 Enforce: The Insurance Policy Enforcement Journal
the storm, most of these issues are just starting to
wind their way through the courts.
Named Storm Deductibles
Many commercial property insurance policies
provide for higher “named storm” deductibles than
standard per occurrence deductibles. How the
policy defines “named storm” can often be critical
in determining whether a named storm deductible
applies to a Sandy-related loss.
While Sandy did at one time possess hurricane
characteristics, it lost those traits prior to making
landfall in New Jersey, and the National Weather
Service downgraded it to a post-tropical cyclone
hours before it came on shore in Brigantine, New
Jersey. This is significant for coverage purposes
because some policies define “named storm” to
mean a hurricane, tropical cyclone or tropical