In the first hurricane season following Superstorm Sandy, you may assume that such natural disasters do not present subrogation opportunities. However, it's critical to investigate subrogation potential in such losses. Natural disasters do not automatically preclude subrogation.

Running June through November, the 2013 Atlantic hurricane season is predicted to be active or “extremely active,” according to the National Oceanic and Atmospheric Administration (NOAA). Severe tropical storms with winds rotating counterclockwise and reaching sustained levels of at least 64 knots (74 miles per hour), hurricanes develop over warm tropical oceans and can produce torrential rains and flooding. They can also spawn tornadoes. Wind speeds can reach 160 miles per hour and extend for hundreds of miles causing property damage many miles from the center or eye of the hurricane.

Evaluating Wind Damage

The most frequent potential liability scenarios involve claims that the wind conditions were below hurricane level and that the property in question failed to conform with code requirements. Statutes of repose will preclude claims for older buildings.

For claims relating to wind damage from a hurricane, ask yourself the following when considering subrogation:

Was the building, especially awnings and roof systems, inspected for integrity by a structural engineer before the loss?
Was the building designed and constructed according to code originally or during any major renovations, which can extend the statute of repose?
Were the windows protected, preferably with permanent storm shutters or with 5/8-inch marine plywood?
Can you obtain accurate wind data from a local NOAA or other facility?
Did other similar buildings in the immediate area sustain damage consistent with the building under investigation and, if not, what was the reason?

Storm Surge and Water Damage

Hurricanes also can lead to water damage claims as a result of the wind-driven storm surge for properties close to the ocean, or from the torrential rains from the hurricane and the tropical moisture when the hurricane is downgraded after coming ashore.

Investigate these factors when you are looking to recover from flood claims. Be sure to determine whether:

The owner or developer of the property had asked the local emergency management office whether the facility was located in a flood plain.
The owner or developer inquired about the history of flooding in the area.
The owner or developer inquired about the elevation of the facility in relation to streams, rivers and dams.
A flood-proofing feasibility study had been conducted.
The community had engaged in flood control projects.
Records regarding the actual rainfall amount for the local area can be obtained from an NOAA station to document the length and intensity of the rainfall.

The above lists are not inclusive but can assist claims professionals in assessing whether there are any subrogation possibilities in the wake of a hurricane.

Sean P. O'Donnell is a partner in the Subrogation & Recovery Department at Cozen O'Connor. Practicing in the Philadelphia office, he represents self-insured companies in recovery claims and related commercial litigation. O'Donnell may be reached at sodonnell@cozen.com.

Special Reports /

Hurricane Claims: Assessing Subrogation Potential

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