Flooding and New York Real Estate Insurance

Many property owners in the New York area are still feeling the ill effects of Superstorm Sandy, which devastated the East Coast nearly a year and a half ago. If you were one of the business owners affected by the storm that caused billions of dollars of damage to the New York and New Jersey areas, chances are you may still be dealing with issues regarding damages and your real estate insurance in New York.

Many businesses suffered extensive property and business interruption losses. Nearly a year and half later, businesses and communities are still struggling with trying to get back on their feet. Those with flood insurance had a lot to be thankful for, while those without likely needed to provide proof that the water damage was not a result of flooding.

Proving that all losses were not the result of flooding

Insureds with flood exclusions or even flood sub limits in their policies would likely have issues if their losses were entirely caused by flood, however, this is not necessarily the case. Service interruption, faulty workmanship or defective design, as well as rain, explosions or other issues may have caused some losses.

Many commercial policies also provide additional coverage for losses from issues including service interruption, debris removal, decontamination costs, civil authority, and protection and preservation of property. Under New York law, identifying the “cause” of a loss for purposes of a first-party insurance policy often requires application of the doctrine of the “efficient proximate cause.”

For example, where two causes lead to a loss, one that is covered and one that is not, the relevant inquiry is to determine which of the two was the dominant and efficient cause of the loss. This determination is generally an issue of fact and could determine whether or not you have experienced a covered loss. Speak to your New York real estate insurance agent for more specifics.

photo credit: Ed Yourdon cc