As those affected by Superstorm Sandy now try to pick up the pieces, many are looking to their property insurers, only to be turned away. Thousands will hear words to the tune of: "I'm sorry; your loss is not covered under your policy because flood is an excluded peril." While for some policyholders this tune will ring true, for others, their loss may be covered if insurers or the courts accept one or more of the three positions explained below.

Property insurance policies are generally in the form of "all-risk" policies, which provide coverage for all risks of loss except risks that are specifically excluded. Typical property insurance policies contain an exclusion for loss caused by flood. Similarly, while commercial insurance policies typically include protection against flood, they often contain a limit that caps flood coverage at a lower level than loss caused by other perils. In both forms of policies, wind damage is usually a covered peril.

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