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Hurricane Sandy wreaked havoc on the East Coast of the United States.  When it struck land, Sandy was approximately 950 miles wide. The “Superstorm” is the second costliest storm in U.S. history. It has been characterized as the costliest single event of 2012, causing approximately $65 billion in economic damage across the United States, the Caribbean, the Bahamas and Canada. Sandy caused an estimated $28.2 billion in insured losses, combining private insurers and government-sponsored programs. More than 642,000 homes and businesses were damaged in New York and New Jersey alone.  New York City Mayor Michael Bloomberg reported that Sandy caused upwards of $19 billion worth of damage to the nation’s most populous city. The storm damaged or destroyed 305,000 housing units and disrupted more than 265,000 businesses in New York. Approximately $500 million in insurance claims related to Hurricane Sandy have been filed to date in New Jersey. The New Jersey Department of Banking and Insurance reports that there have been approximately 36,000 commercial property damage claims made, with approximately $255.6 million in losses paid.  Business interruption claims in New Jersey, thus far, have totaled approximately 12,000 with $53.4 million paid. As of January 22, 2013, insurers had reported a total of approximately $18.7 billion in reported losses from Hurricane Sandy.

As families and businesses continue the rebuilding process, many of them have, and will continue to look to their insurers for funds to help rebuild and cover losses.  Although courts grappled with many of these issues following the September 11 terrorist attack and recent natural catastrophes such as Hurricane Katrina, the body of law concerning these issues is limited because property claims are not frequently litigated and are often resolved through the appraisal process.  Insurers, who have already faced pressure from federal, state and local government to quickly pay out claims, will be forced to confront difficult issues regarding the scope of their coverage for these losses. Just three months after the storm, several lawsuits concerning insurance coverage related to Hurricane Sandy have already been filed. This memorandum briefly addresses the types of insurance likely to impacted by claims arising out of the storm; potential insurance coverage issues that may be raised by those claims; and reinsurance issues that are likely to arise as a result.  In light of the limited case law dealing with these issues, this memorandum references cases from courts throughout the country.