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…
Yearly Archives: 2014
A New York Court Bars Coverage for a Power Outage Caused by Superstorm Sandy
Posted in Acts or Decisions, Business Interuption, Direct Physical Loss or Damage, Flood, Superstorm Sandy
The House and Senate Vote to Roll Back National Flood Insurance Program Premium Increases
Congress has officially placed the bipartisan Homeowner Flood Insurance Affordability Act in hands of President Obama. If enacted, it will undo significant provisions of a 2012 law that caused sharp flood insurance rate increases. On March 4, the U.S. House of Representatives voted 306-91 to pass the Homeowner Flood Insurance Affordability Act of 2014, H.R. 3370. This repeals portions of the Biggert-Waters Flood Insurance Reform Act. Just yesterday, March 16, the U.S. Senate voted 72-22 to approve the bill and send it to the President for his consideration. For those who don’t remember the Biggert-Waters Act, it was passed back in 2012 with overwhelming support in both houses of Congress. It called for changes to the National Flood Insurance Program. …
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…
Posted in Ambiguity, Business Interuption, Contingent Business Interruption, Explosion
Federal Courts In New York and New Jersey Explore Streamlining Superstorm Sandy Discovery
Despite opposition by both many attorneys and the Federal Emergency Management Agency (“FEMA”), the federal court for the Eastern District of New York has now taken the first steps towards grouping some of the hundreds of pending Superstorm Sandy cases and expediting discovery in all of the them, and the District of New Jersey appears very likely to follow suit. Superstorm Sandy is now officially the second most costly storm in United States history, having caused over $50 billion in damages, and one of the most heavily-impacted jurisdictions was the United States District Court for the Eastern District of New York. The Eastern District comprises Staten Island and all of Long Island, including the New York City boroughs of Brooklyn…
New York’s Highest Court Holds a Two-Year Suit Limitation Provision Can Be Unenforceable
In answer to a question certified by the Second Circuit, New York Court of Appeals has held that a two-year suit limitation provision in a property insurance policy – which the court acknowledged was not an “inherently unreasonable” provision – was unenforceable under the factual circumstances of the case before it. Executive Plaza, LLC v. Peerless Ins. Co., — N.Y.3d –, 2014 WL 551251, 2014 N.Y. LEXIS 165 (N.Y. Feb. 13, 2014). In doing so, the court held for the first time that such a limitation period may be rendered unreasonable by what it called an inappropriate accrual date. Peerless Insurance Company issued a $1 million fire insurance policy to Executive Plaza. This gave Executive the choice to select payment…
Florida Property Manager’s Insurable Interest Is Limited To Its Fees
In Banta Properties, Inc. v. Arch Specialty, Ins. Co., —Fed. Appx.— , 2014 WL 274478 (11th Cir., January 24, 2014), the Eleventh Circuit recently held that a property manager’s insurable interest in the apartment complexes that it managed was limited to the income that it was entitled to receive under its contracts with the buildings’ owners. Under Florida statutes, the measure of insurable interest is the loss that the policyholder might sustain from damage to the property, and that was held to preclude the property manager from asserting such an interest and recovering on its own behalf for the property damage that the apartments sustained from Hurricane Wilma. In October of 2005, Hurricane Wilma damaged three apartment complexes in Broward…
Wisconsin Adds “Septage” To The List Of Substances Deemed To Be Pollutants
In Preisler v. Kuettel’s Septic Service, LLC, et al., 2014 WL 114325 (Wisc.App., Jan. 14, 2014), the intermediate level of appellate court in Wisconsin recently held that “septage” – a combination of water, urine, feces, and chemicals that is used as a fertilizer – was “unambiguously a pollutant.” The case involved the scope of comprehensive general liability (“CGL”) coverage, but the CGL policy exclusions at issue were virtually identical to pollution exclusions commonly found in first-party contracts of insurance. The decision is important to property carriers as a result, and it also rejects a number of arguments that first-party insureds frequently make in an effort to limit or avoid the application of such language. The Preislers owned a dairy farm…
Posted in Efficient Proximate Cause, Exclusions, Pollution, Reasonable Expectations
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…
