While authorities are determining responsibility for the blackout that impacted 50 million people and thousands of businesses, many companies have begun preparing insurance claims. Nonetheless, it may be difficult to recover lost revenues and expenditures stemming from the largest blackout in U.S. history until authorities can determine its cause and assign responsibility.
Potentially thousands of businesses may file lawsuits against energy providers deemed responsible for the blackout while individuals and state governments may seek to recoup losses from power providers.
Additionally, other litigation may result from the failures of emergency power and other critical back-up systems that did not work as expected after the power went out. Industries that were particularly hard hit by the blackout include aviation, retail, and auto manufacturing. Additionally, restaurants and supermarkets will likely have claims to cover spoiled food.
Given the extent of uncertainty surrounding the blackout and its high cost, executives may be asking several questions:
- Have I already established the necessary accounting and technical protocols to measure and track the extent of my losses?
- Do I understand that the failure to document losses now can limit recovery later?
- Can I recover lost revenues and other expenses resulting from the blackout?
- How can I accurately determine the extent of my blackout-related costs?
- How can I present my claims to ensure the maximum recovery from insurers?
"Many policies, especially those for businesses, exclude power failure as a basis for claims. And for those companies that carry business interruption insurance, they may have to prove some resulting physical property damage in order to make a claim."
Lorretta Worters, Spokesman for the Insurance Information Institute 8/15/03
- If I cannot recover insurance claims, how can I recoup blackout-related losses?
- Should I file suits against responsible parties?
- Could my business be liable for blackout-related costs? Could I be sued?
- How can I prepare to mitigate the damages of a lawsuit?
- How should I handle self-insured and third party claims?
To help address these and related issues, there are a number of solutions that executives can use to help their businesses recover losses. These include:
Forensic Accounting and Claims Services: Assist clients in establishing accounting protocols to track loss-related costs and expenditures as well as assessing large and complex damage claims. FACS services are critical for clients that have sustained blackout-related damages as well as those that must defend against claims.
Liability Claims Consulting: Assist companies in establishing processes and procedures for managing claims as well as assisting in the selection of third party claim administrators. Also helps companies achieve measurable savings in claim costs whether they are simply insured, self insured, or insured under loss-sensitive programs with significant retained risk. In addition, facilitates equitable and timely claim payments when dealing with complex claims, disputes over coverage, or difficulty in obtaining a claim payment.
Mass Tort and Complex Liabilities Consulting: Assist companies in understanding, organizing, mitigating, and resolving mass tort and complex liability exposures. Includes policy archeology, coverage analysis, and allocation modeling to support financial planning, mergers and divestitures, claims negotiations, and insurance recoveries.
“David Steuber, a Los Angeles, California-based lawyer at the firm Howrey Simon Arnold and White, said the outages could end up leading to big costs for insurers because of property claims and any lawsuits that could arise claiming negligence on the part of a utility. ‘There are a lot of different types of lawsuits that could come of this and a lot of losses that could be covered under more or less standard property policies,’ Steuber said. The potential for lawsuits and insurance claims will become clearer once there is a better understanding of what caused the outages, he said.”
Now is the time to begin reviewing your insurance coverage and determining whether you can recover losses resulting from the blackout.
If you have any questions or would like additional information, please contact us.
