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Wiley Rein's Laura Foggan Comments on Insurance Coverage Issues Related to the Japanese Disaster

Business Insurance
March 28, 2011

Insurance Practice partner Laura Foggan was quoted discussing insurance coverage issues related to the Japanese earthquake and tsunami in two Business Insurance articles. Insurers and their policyholders will face complex issues in trying to resolve business interruption claims due to the supply chain interruption from the earthquake, tsunami, fires and power outages, as well as consequences of radiation leaks from the nuclear power plant. While coverage of earthquakes and tsunamis commonly are excluded from property policies, "many [policyholders] that have a large reliance on Japan probably do have manuscripted policies" that provide for this coverage, Ms. Foggan said.  An additional thorny issue for policyholders is the rolling power blackouts mandated by the Japanese government. "Coverage would probably depend on the wording of the policy," she said, noting that business interruption coverages generally require that lost income be due to "property damage" as a result of a covered cause of loss.

Discussing steps that risk managers who are overseeing businesses that have been affected by the disaster should be doing, Ms. Foggan noted that "risk managers also have notification responsibilities. There are, of course, responsibilities to provide prompt notice and to promptly collect information, but those responsibilities are not necessarily inflexible in a crisis situation."