According to recent estimates, total insured losses for Superstorm Sandy will total at least $25 billion. This figure dwarfs the $4.5 billion in estimated losses caused by Hurricane Irene in 2011. Natural disasters often involve a large number of claimants residing in a given geographic area, where the value of an individual claim alone may not warrant the expense of pursuing individual litigation.

This, combined with the costly nature of natural disaster claims, as well as state requirements relating to insurers’ claims handling practices, create a fertile ground for class action litigation.

Insurers, however, can take steps to minimize class action exposure by employing diligent claims handing processes; ensuring compliance with relevant state requirements; and continually reviewing and revising policy language to reflect lessons learned through litigation.