New legislation passed by the New York Assembly may change the way storm claims are processed in the state, possibly forcing insurers to cover flood damage from the next storm.

Bill A 7455A outlaws anti-concurrent causation relating to flood, which would allow homeowners to receive payment for damage to a structure if they prove the water was let in due to previous wind or fire damage, said lawyers at Anderson Kill's 17th Annual Policyholder Advisor Conference in New York City.

“If anti-concurrent causation is ruled to not apply in New York State, it could mean billions of dollars paid to claimants,” said Finley Harckham, a senior litigator and executive committee member for Anderson Kill. “It would apply to many claims, such as [those] in Louisiana and Mississippi, where people's roofs were blown off, exposing their property to torrential rain.”

A second bill, A 5780, establishes a private right of action for unfair insurance settlement practices relating to claims for loss or injury in an area that was declared a disaster emergency.

Harckham brought up a Con Edison transformer explosion that occurred during Sandy, plunging Manhattan into darkness. Although the explosion was caught on video and uploaded to the internet, the utility contested the incident was actually an electric shutdown. Two complementary pieces of legislation in the assembly establish a shortened length of time in which insurers can settle or dispute a claim, respectively.

A 1092A gives insurers 15 days, with the option of one 15-day extension, to accept or reject a claim, and 3 days to send payment.

The second bill expedites actions involving claims for damages resulting from a disaster emergency: any action involving an insurance claim for damages to property in a disaster area must be announced within 30 days after filing the initial request for court intervention, and all discovery, (identification and reporting of losses) must be completed within 60 days from the date of the first hearing.

“The new laws would not apply retroactively to Sandy victims, but it would help a lot of policyholders when the next storm hits,” said Harckham.

Special Reports /

N.Y. Bill Challenges Policy Language Excluding Flood Coverage

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