Legal Community Swept Into Action By Sandy
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.