Blog Archives

New York Court: Broadly-Worded Flood Limit “Meaningless” Unless it Applies to Any Kind of Loss Caused by Flood

Yesterday in El-Ad West LLC v. Zurich American Ins. Co., 2015 WL 4078762, 2015 N.Y. App. Div. LEXIS 5753 (N.Y.App.Div., Jul. 7, 2015), a unanimous panel of New York’s intermediate level appellate court held that a flood sub-limit capped all loss caused by flood, without regard to whether it was physical damage to property or a “downstream” financial loss such as delay in completion.  In the words of the opinion, reading the contract of insurance in such a way as to find that the flood sub-limit did not apply to delay in completion losses “would render the flood limit meaningless with respect to that coverage.”  The panel thereby affirmed a Superstorm Sandy decision that we reported on in July of

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Posted in Builders' Risk, Delay in Completion, Flood, Superstorm Sandy

Arizona Court: Argument that All Business Income Loss Caused by a Wildfire is Covered is “Off Base”

Several weeks ago in White Mt. Communities Hosp., Inc. v. Hartford Cas. Ins. Co., 2015 WL 1755372, 2015 U.S. Dist. LEXIS 50900 (D. Ariz., Apr. 17, 2015), an Arizona federal court underscored that business interruption losses flowing from a wildfire are only covered to the extent that they stem directly from physical loss or damage to the policyholder’s property.  In other words, loss of income due to the fire in general is beyond the scope of such coverage absent a causal nexus with repairs necessitated by the blaze. The policyholder White Mountain owned a hospital in Springerville, Arizona.  On May 29, 2011, a blaze was started by an abandoned campfire in the nearby Bear Wallow Wilderness Area.  The wildfire ultimately

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Posted in Business Interuption, Causation, Contamination, Direct Physical Loss or Damage, Fire, Smoke and Soot, Wildfire

New York Court: All Sandy Losses, Including “Downstream” Financial Ones, Capped By Annual Aggregate Limit For Flood

Superstorm Sandy jurisprudence is starting to shed light on some unresolved issues in the effected states.  In El-Ad 250 West LLC v. Zurich American Ins. Co., — N.Y.S.2d —, 2014 WL 2931058 (N.Y.Cty., June 27, 2014), a New York court held last week that a $5 million annual aggregate limit of liability for losses caused by flood capped any recovery for all such loss, without regard to whether it was physical damage to property or a “downstream” financial loss such as delay in completion.  It was a case of first impression in New York. On October 29, 2012, the policyholder, El-Ad 250 West LLC, was converting an 11-story office building into a 12-story luxury condominium complex in lower Manhattan.  Superstorm

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Posted in Builders' Risk, Delay in Completion, Flood, Superstorm Sandy

A New York Court Bars Coverage for a Power Outage Caused by Superstorm Sandy

This week saw a New York court bar a policyholder’s claim for business interruption occasioned by the loss of off-site power after Superstorm Sandy.  In Johnson Gallagher Magliery, LLC v. Charter Oak Fire Ins. Co., 2014 WL 1041831 (S.D.N.Y., March 18, 2014), the federal court held that a law firm could not recover for the six-day period during which one of Consolidated Edison’s networks was out-of-service.  The network was shut down preemptively several hours before the storm, and the contract of insurance’s “acts or decisions” exclusion was held to bar coverage for that period of time.  In addition, a “water” exclusion operated to preclude coverage for the time necessary to clean, repair, and re-energize the system after the flooding where

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Posted in Acts or Decisions, Business Interuption, Direct Physical Loss or Damage, Flood, Superstorm Sandy

The Fourth Circuit Clarifies Who Is A Direct Supplier Under Contingent Business Interruption Coverage

In Millennium Inorganic Chemicals, Ltd. v. National Union Fire Ins. Co. et al., — F.3d. — , 2014 WL 642993 (4th Cir., Feb. 20, 2014), the United States Court of Appeals for the Fourth Circuit recently clarified who constitutes a direct supplier of goods and services under contingent business interruption (CBI) insurance, and it specifically rejected arguments that the undefined term “direct” in the coverage grants of the CBI endorsements at issue was ambiguous in nature. The policyholder, Millennium Inorganic Chemicals, Ltd., processed titanium dioxide at its facility in Western Australia, using natural gas that it received via a pipeline.  It purchased the gas from Alinta Sales Pty Ltd., a retail gas supplier.  Alinta, in turn, purchased the gas it

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Posted in Ambiguity, Business Interuption, Contingent Business Interruption, Explosion

Saving Green by Going Green

As Kermit the Frog famously said: “It’s not easy being green.”  When it comes to property insurance, Kermit is only partially correct.  Although green buildings and commercial construction projects pose unique risks that are likely not covered by traditional commercial property policies, the insurance industry has become increasingly responsive to this issue by creating and offering products specifically tailored for green risks. Just What is Green Construction, Anyway? Green construction (also known as a “green building” or a “sustainable building”) is an environmentally responsible and resource efficient structure and process.  In other words, it’s not just the building itself that’s “green” – it’s the entire construction and using process. The objective of green construction is to reduce the overall impact

Posted in Business Interuption, Green Insurance, Replacement Cost
About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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