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James P. Bobotek is a counsel in the Insurance Recovery & Advisory practice at Pillsbury Winthrop Shaw Pittman LLP.   Last fall, Superstorm Sandy ripped across the East Coast, causing unprecedented damage to coastal and inland areas lying in its path. Making landfall near Atlantic City, N.J., the storm wreaked havoc from North Carolina to Connecticut, and as far inland as the Great Lakes. Sandy also caused tidal surges that inundated Lower Manhattan and flooded New York’s airports, knocked out critical infrastructure including power, rail, and subway systems, and destroyed tens of thousands of homes. The storm caused at least $50 billion in physical damage, while tens of thousands of businesses that suffered little or no physical damage nonetheless experienced catastrophic business interruption losses.  

As is the case after any natural catastrophe, businesses affected by Superstorm Sandy promptly turned to their insurance carriers for help. Many insurance policyholders were taken aback by the significant obstacles insurers placed before them in responding to their property and business interruption insurance claims. Sandy was a wake-up call for policyholders in the Northeast, many of whom previously had perceived the risks associated with hurricane, flood, and storm surge damage as inconsequential. Given that the National Oceanic and Atmospheric Administration and other organizations have predicted “extreme activity in the Atlantic” this hurricane season, with “more and stronger hurricanes” expected, there is no better time to review your property insurance coverage. The discussion below provides an overview of some insurance coverage-related issues facing commercial policyholders after a catastrophic storm.

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