Climate Change Litigation

Insurers are taking steps to identify a connection between climate change and weather-related damages, and one insurance company, Illinois Farmers Insurance Company ("Farmers"), filed a lawsuit to bring attention to the issue.  Earlier this month, Farmers voluntarily withdrew the class action lawsuits that Farmers had filed against numerous counties and towns in the Chicago area of Illinois for failure to prevent flood damage.  Even though Farmers withdrew the lawsuits shortly after filing, the allegations are worth review for preparing for or preventing similar claims in the future. 

In mid-April of 2014, Farmers filed class action lawsuits against the counties and towns regarding flood damage caused by heavy rains in April of 2013. The complaints alleged that the counties and towns failed to properly manage stormwater systems and sanitary sewer systems and that the governments knew or should have known that heavier rains would fall due to climate change. The complaints allege that the governments should have taken actions to prevent the damages incurred as a result of flooding. 

The complaints identified the proposed class of plaintiffs as Farmers, its subsidiaries, their policyholders, and any other property owner within each county that sustained damage as a result of stormwater or sanitary sewer water intrusion that occurred during the heavy rains in April of 2013.  The complaints identified damages as all property damages caused by the identified water intrusion, the payments made by the insurers as a result of the property damage, evacuation costs, and other uninsured losses.  

The lawsuits targeted the governments for their "ownership, operation, and control" of the stormwater and sanitary sewer systems.  The complaints alleged that the governments knew of defects in the systems and published the defects in detailed watershed plans.  The complaints alleged that the governments "failed to provide safe, adequate mitigation storage for stormwater to prevent stormwater invasions."  The allegations provided several means for mitigation including raising the banks of stormwater structures, pre-rain pumping of water retention structures, and additional pre-rain staging measures. 

Farmers alleged that the governments knew or should have known that climate change would cause heavier rains.  The complaints alleged that, in or around 2008, the governments "adopted the scientific principle that climate change has caused increases in rain fall amount, intensity and duration during a rain . . . as evidenced by their adoption of the Chicago Climate Action Plan."  The complaints alleged an increase in rainfall in the area over the past 40 years. 

Following withdrawal of the lawsuits, Farmers released a statement that it brought the suits in part to "encourage cities and counties to take preventative steps to reduce the risk of harm in the future."  Farmers stated that it sought to bring important issues to the attention of local government so that its policyholders would be protected.  Farmers expressed the hope that it could continue constructive conversations with the local governments "to build stronger, safer communities." 

These lawsuits are evidence that insurers are taking steps to identify a connection between climate change and weather-related damages of facilities subject to insurance policies.  While the primary goal may be to protect the business interests of the insurance companies, insurers are seeking ways to promote loss prevention from the current and expected effects of climate change.