If there are appropriate exclusions, Frenchman added, they should be construed narrowly so they apply to the correct portion of the loss.
"You have to see if the causes for the loss can be characterized as something other than flood. You're going to get push-back on that, but you try to make the arguments as best as you can," said Mark Garbowski of Anderson Kill & Olick.
One obstacle to this argument is an anti-concurrent causation clause, which is becoming more common, Garbowski said. This clause provides that if a loss could be considered to be caused by two different events, such as wind and water, the excluded event overrides a covered one, and coverage is denied, Garbowski said.
Courts in New York have generally upheld the language in anti-concurrent causation clauses, Troisi said.
Lawyers say characterizing the loss early on, such as whether it is damage from wind or flood, is crucial.
"There are decisions that you make now, including how you start characterizing causes and losses, that can affect you down the road and you have to be careful about how you stake out your positions," said Garbowski, who estimated a couple dozen people so far have contacted the firm in the weeks after Sandy for insurance questions.
J. Robert Hunter, insurance director of the Consumer Federation of America who sits on a committee charged with making recommendations on improving storm preparedness to Governor Andrew Cuomo, said Nov. 30 that one reform being considered is a ban on anti-concurrent causation clauses.
Lawyers also say a lot of money will ride on how Sandy was classified. The storm was eventually downgraded from a hurricane.
In the days after Sandy hit, New York state officials announced that homeowners would not have to pay large hurricane deductibles stemming from Sandy damage.
"We have informed the insurance industry that hurricane deductibles are not triggered because Sandy did not have sustained hurricane-force winds when it made land in New York," said Benjamin Lawsky, superintendent of financial services, in a press release.
"The biggest question we're hearing," Zola said, is "whether there's insurance coverage for losses sustained without any [direct] physical damage to property," such as business interruption insurance.
Before Sandy hit, New York City officials set up evacuation zones and after the storm, many businesses weren't able to return to their offices.
Zola said many commercial property policies have coverage for situations in which the policyholder loses business income or pays extra expenses because of governmental orders, such as an evacuation or curfew. Those so-called civil authority provisions may trigger business interruption insurance, he said.
Another type of coverage, contingent business interruption, which provides coverage for business interruption losses due to physical loss or damage to the property of the policyholder's customers or suppliers, will likely be raised, Zola said.