Superstorm Sandy struck a less-devastating blow to Connecticut than it did to New Jersey and New York. Still, the Oct. 29, 2012, hurricane cut a wide swath in terms of affecting the state’s legal community.
There are expectations of litigation over insurance coverage. Attorneys working for governmental agencies have helped to put into place better disaster planning. And there have been pro bono efforts to assist storm victims.
As of May 2013, 47,002 residential-property claims were reported in Connecticut as a result of the storm. There were also 4,460 commercial-property claims, 2,772 flood claims, and 1,212 business interruption claims, according to the Connecticut Department of Banking & Insurance.
While it’s been nearly 14 months since the storm hit, Sandy-inspired litigation will take a while to fully develop, said Ryan Suerth, of Ryan Suerth LLC in Hartford, who represents policyholders. He explained that it often takes more than a year for policyholders to learn that their insurance claims have been denied or that they will get less money than they had hoped.
“Any major weather is going to lead to litigation, just for the reason there is a lot of damage and not all of it gets covered by insurance,” Suerth said.
Michael McCormack, a Hinckley Allen attorney who chairs the Connecticut Bar Association’s Insurance Law Section, said he has seen few Sandy-related claims being filed in court so far. One reason, he said, is “the insurance companies responded quickly. They worked with policyholders as best as they could.” Secondly, he said, many consumers lack flood insurance, meaning that instead of making a claim on their homeowner’s policy they must apply to Federal Emergency Management Agency’s National Flood Insurance Program.
But Regen O’Malley, an insurance defense lawyer with O’Connell, Attmore & Morris in Hartford, predicted that Sandy will ultimately result in more legal activity than did 2011′s Tropical Storm Irene. One insurance issue that often prompts legal disputes is the question of whether property damage was caused by rain or flooding.
“It really depends upon what the policy says [is covered] for those types of claims,” O’Malley said. “And with [Hurricane] Katrina and now Sandy, there might be multiple causes. There might be wind, flood, storm surge and something else.”
For some policies, coverage is denied if multiple factors caused damage and some of those factors are not listed in the policy.
Gregory Podolak, of Saxe Doernberger & Vita in Hamden, explained that some homeowner polices cover only “named perils.” The most common of these include lightning, fire, rain, windstorms and theft. But exactly how these terms are defined in a specific policy can have a dramatic impact on a consumer’s “coverage position,” Podolak said. Many policies have specific deductibles and coverage limits related to specific named perils, he added. And Legal issues arise when there are multiple perils that could have caused property damage, he agreed.
Another insurance issue arising from Sandy is business interruptions caused by the loss of electric power. Some parts of the state lost power for a week or more, and businesses filed claims seeking lost revenues for days they could not operate.
“What Sandy and Irene have done is highlight some of the issues that don’t come to the forefront as often,” Podolak said.
Cases that do go into litigation may involve claims of bad faith by insurers and violations of the Connecticut Unfair Trade Practices Act and the Connecticut Unfair Insurance Practices Act. There also may be litigation against insurance brokers and agents for allegedly not recommending sufficient coverage, attorneys said.
Gerard O’Sullivan, program manager of the Insurance Department’s consumer affairs unit, said Sandy has highlighted the need for the state to have an insurance mediation program.
Such a program was authorized by legislation this year. And while it is not being used to hash out Sandy-related disputes, it will be available the next time Connecticut is hit with a major disaster involving hundreds of thousands of claims.
“This is for a big, big one,” O’Sullivan said.
The program will be optional for consumers, but insurance companies have to participate in a mediation if one of their policyholders opts for it.
Connecticut studied similar programs in New York, New Jersey, Florida and North Carolina before launching its own. North Carolina consumers “were very happy with the process and [felt] it was a good way for the parties to come together and come to an agreement on the value of claims,” O’Sullivan said.
Sandy also has resulted in enhance disaster planning, some of it involving lawyers and legal issues.
Nilda Havrilla, managing attorney of Connecticut Legal Services’ housing unit, said a task force was formed to help relocate public-housing tenants after Sandy. That, in turn, led to the development of a broader disaster response plan. For future disasters, the goal is for there to be “no scrambling, no looking around” to get all the relevant governmental agencies and other groups to the table to assist people who are displaced because of disasters, Havrilla said.
“More than likely, there will be another disaster like this,” she said.
Brenda Bergeron, an attorney with the state Division of Emergency Management and Homeland Security, said that after Irene hit in August 2011, Gov. Dannel Malloy directed her division to launch an emergency preparedness initiative. The effort brought together representatives of local and state agencies, utility companies and private nonprofits, such as the Red Cross.
The planning involved a number of legal issues. For instance, contracts and memorandums of understanding had to be drafted on the role different agencies would take on following disasters. And there needed to be formal agreements on who takes responsibility for liability and workers’ compensation for states employees who are sent to other states to assist after storms.
“Because of the governor’s initiative, when we had Sandy, things ran smoothly,” Bergeron said.
The state court system also reacted to Irene and Sandy by updating its emergency response plan.
Melanie Kerr, program manager with court operations for the Judicial Branch, said the court system now staffs a desk in the state emergency operations center. That means official will participate in the twice-daily briefings the governor gets during major storms and it also means the court system will have better information to communicate to employees and the public on the status of court facilities.
“We’ve increasingly done a better job coordinating with the executive branch, communicating with our personnel within the Judicial Branch and being prepared for disasters,” Kerr said
Disaster Pro Bono
Sandy also spawned a number of pro bono efforts.
Dana Hrelic of Horton, Shields & Knox in Hartford was the point person for FEMA’s disaster legal services program in Connecticut from 2011 to 2013. She said in an email that the CBA and the CBA’s Young Lawyers Section provided volunteers to staff a hotline that handled dozens of calls about everything from fallen trees to FEMA aid applications to insurance policies.
The CBA’s insurance law association also started a hotline to answer insurance questions arising from disasters. Attorneys from the section volunteered up to 30 minutes of their time.
After Sandy, one family who suffered losses from their basement flooding did not have flood insurance, but a section member advised them about FEMA grants. Another caller was a renter who evacuated her leased home; she was advised that the landlord might have an insurance policy that would cover her losses too.•