Insurance Agents in the Wake of Superstorm Sandy

Superstorm Sandy’s wind and rain are long gone but the storm’s legal wrath has only just begun.  As the cleanup continues, and insurance and legal issues pile up, we are starting the see the first wave of lawsuits following the storm.  In particular, the initial targets appear to be insurance agents.

In a recent suit filed in New Jersey Superior Court, a Yacht Club alleges that its insurance professional failed to procure sufficient coverage.  The Raritan Yacht Club allegedly sustained significant damage from the October 29, 2012 storm.  The clubhouse remained intact but docks, launches, yard buildings, and boats were severely damaged.  According to the lawsuit, many of its insurance claims were rejected or only partially funded.

The club now blames its insurance agent for the rejected claims.  The club maintains that it had been meeting with its agent since 1996 to review coverage in an effort to protect its assets.  The club asserts in its complaint that its agent breached its fiduciary duty when it failed to properly insure the facility.  For example, the club maintains that it lacked flood insurance which should have been suggested by the agent.

We are sure to see many more professional malpractice suits arising from Superstorm Sandy given its magnitude and the unprecedented damage.

In a post-Sandy era, it is likely that the fact-finders’ expectations for their professionals may be a bit higher when it comes to the inevitable next storm. The damage sustained by Sandy provides us all with a greater understanding of the possibilities. The takeaway is that insurance professionals communicate to their clients the risk of losses up to and exceeding that of Sandy so that the client makes an informed decision.