The insurance claims process can be confusing and overwhelming for some insureds, particularly when they are in the process of resetting their lives after a major catastrophe.
Such is the case in Texas, where millions of residents braved single-digit temperatures with no power for days in many parts of the state during Winter Storm Uri in February. There were deaths and injuries resulting from the freezing temperatures, as well as widespread water damage due to broken pipes. Additionally, loss estimates from the storm are predicted to rise to as much as $130 billion in the state, according to AccuWeather.
Joshua M. Sandler, a partner at Lynn Pinker Hurst & Schwegmann, recently spoke about the insurance claims process and what plaintiffs and defendants can expect from the many lawsuits predicted to flood the courts in the coming months.
Question: What’s happening with the insurance claims now that the storms are over and the power has returned?
Sandler: As you can imagine, Oncor, ERCOT and various energy companies have been named in numerous lawsuits alleging negligence claims against them. Those allegations stem from frostbite and hypothermia; catastrophic brain damage sustained due to a fall during the blackout; death caused by pneumonia contracted during the power outage; a wrongful death claim brought by a family member whose loved one died during the power outage; death caused by an oxygen machine that lacked power; and a suit seeking damages related to skin sores.
At the same rate, energy companies such as Griddy have been sued under the Texas Deceptive Trade Practices Act for overcharging individuals during the outages. The State of Texas also initiated a DTPA claim against Griddy.
Given that these suits were only recently initiated, the defending electricity providers and companies will need to file answers to the lawsuits in which they are named. Those answers, I imagine, will vary based on the entity sued and the facts at hand. For example, are there any sort of immunities from civil suits, such as sovereign immunity, available to ERCOT? These types of protections are likely unavailable to private companies such as Griddy. From there, how the lawsuit will transpire will largely depend on the strategies employed by each respective defendant named in the suit. Will they explore early settlement options? Will they seek additional protections and/or defenses? Time will tell.
Question: What does this mean for attorneys representing insurance and corporate clients?
Sandler: The insured losses stemming from Winter Storm Uri are estimated to be between $10 billion to $20 billion. By comparison, Hurricane Harvey was a category 4 hurricane and caused $19 billion in insured losses. So, regardless of whether the damage was caused by Mother Nature or human nature, the significance of Uri should not be overlooked.
Moreover, it seems likely that most of these negligence claims will be handled by the respective defendants’ insurance carriers. Attorneys handling these claims will want to ensure they employ a detailed review and summary of key documents and notes so they can best understand the factual circumstances underpinning each claim.
At the same time, attorneys should advise their corporate clients to check their electricity bills and ensure they have not been charged high variable rates during the time of the storm and power outages. Attorneys should also check in with their corporate clients to see if there have been any issues stemming from the storm: delayed deliveries, loss of information due to outages, physical damage to property?
Question: What should attorneys in this practice area be doing to best serve their clients now that claims piling up?
Sandler: Listen. Some individuals have sustained more damage than just frozen pipes; some have had to tragically endure the loss of a loved one. The best thing attorneys can do right now is listen to their clients — whether those clients are individuals or businesses — and determine whether the facts at hand give rise to meritorious claims or defenses.
Question: What questions should attorneys be prepared to answer for their corporate clients in the coming days?
Sandler: Well, that really depends on the industry and the nature of the issue. Many businesses were affected by the storm in myriad ways. Frankly, it is less about what questions to answer and more about what questions to ask: How did the power loss especially affect the specific business in question and how has the business been harmed as a result? The answers to those questions will vary based on the type of business at issue, the type of damage sustained, and whether the damage came about by virtue of a contractual, statutory or common-law relationship?
Question: How long do you think all the claims will take to wind through the courts?
Sandler: Even as we speak, judges are getting more freedom to open their courtrooms, which will positively impact the logjam of cases and trials that have transpired throughout the COVID-19 pandemic. At the same rate, I would not be surprised to see more claims filed over the next few days and weeks related to property damage. All told, I would estimate that resolution of the majority of claims stemming from Winter Storm Uri will occur in the next one to 1.5 years.