Don’t Be Caught Off Guard By Insurance Policy Sublimits

Originally published by Shaun Marker.

The moral of this story is don’t be caught off guard by insurance policy sublimits. It isn’t every day that a policy sublimit issue involves hundreds of millions of dollars. However, that recently was the case involving a Superstorm Sandy claim in New Jersey.1 Public Service Enterprise Group filed a lawsuit in New Jersey against numerous insurance carriers seeking several hundred million dollars in coverage for Super Storm Sandy damage. One of the issues involved whether a flood sublimit applies.

So what are insurance policy Sublimits? Larry Bache provides a good industry definition in his post, Are You Covered? Sublimits Can Sneak Up On Unaware Policyholders. An insurance policy “sublimit” is:

A limitation in an insurance policy on the amount of coverage available to cover a specific type of loss. A sublimit is part of, rather than in addition to, the limit that would otherwise apply to the loss. In other words, it places a maximum on the amount available to pay…

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