Superstorm Sandy crippled communities, caused billions of dollars in property damage and resulted in hardship for thousands of people. Insurance claims have been pouring in. But how can insurance professionals make informed decisions regarding investigating flood claims? Which of the thousands of flood claims should be investigated for subrogation? 

There are several approaches, from investigating all flood claims to investigating none, or only investigating those with obvious potential such as dam breaks, pipe breaks or collapses. The best solution is somewhere in the middle—a disciplined, incremental approach. 

Carriers can pursue flood subrogation litigation and win, but informed investigation decisions must be made early on. From a liability perspective, floods are typically considered Acts of God. The Act of God defense requires that the flood be solely caused by unpredictable, uncontrollable natural events without any human intervention. However, most floods are a combination of naturally occurring events and human intervention; for example, a large rainstorm combined with the property owner's failure to maintain a bridge, culvert or waterway. If we can demonstrate human intervention caused or contributed to a loss, settlement discussions—oftentimes ignored by liability insurers because of the Act of God defense—can occur.