Hurricane Harvey Recovery: Tips for Maximizing Coverage

Orrick’s insurance practice, led by Barry Levin, Steve Foresta, and Darren Teshima, has extensive experience handling post-disaster claims for policyholders and can help you advise your clients on recovery of their Harvey-related losses. We have assisted companies seeking insurance recovery for property damage and lost profits resulting from business interruption due to flooding and other disasters, supply chain impacts and electrical and computer network failures, even when there is no physical damage to the insured’s property. A client’s commercial property policy typically provides coverage for both property damage and lost profits, also known as business income/business interruption coverage. The policy often also provides coverage for “extra expense,” which is loss incurred by the policyholder to maintain business operations, and for trade disruption/ contingent business interruption, which is lost profits resulting from interruption to the operations of third parties in a client’s supply and distribution chain including both upstream and downstream business partners.

Those affected should start considering the following as soon as possible:

• Document all potential losses. Fully document in detail all Harvey-related damages and costs, including property damage (e.g., structures, inventory, data), lost profits, loss of access to property (e.g., due to mandatory evacuation, washed-out roads, and utility outages), upstream / downstream interruptions, and mitigation costs, such as sandbagging or establishing operations at alternative sites.
• Identify policy deadlines. Policies typically include deadlines for providing notice to the insurer, and submitting a proof of loss (e.g., 90 days after loss). Policyholders also should be aware of the limitations period to initiate a lawsuit against an insurer. Texas HB 1774, which went into effect September 1, 2017, imposes new requirements on such lawsuits, including additional pre-suit notice.
• Provide notice under applicable policies. Initial notice usually can be high-level, with details provided later. Notice can be provided through a broker, and counsel can assist with these and other communications with insurers.
• Analyze potential exclusions to coverage. One fight that policyholders and insurers frequently have following a hurricane is about the cause of the loss—such as floods, which often are excluded unless additional coverage is purchased, or windstorms, which are covered causes. Even different types of windstorms may be treated differently under the policy; coverage for “hurricanes” may be more restricted than coverage for “tropical storms.”

Insurance Recovery at Orrick

We have recovered billions of dollars from insurance companies for policyholders, most often through negotiation and, when necessary, through litigation. Our team knows the insurance business from every angle, and can help you with every kind of claim, from general liability, D&O, E&O and cyber. We leverage that vast expertise to address the cutting-edge coverage issues facing policyholders today: cyber and data breach coverage; the unique business risks facing high-growth technology companies; and some of the most complex insurance disputes in the financial services area.