On Thursday of last week, a federal court in New York City tossed an Order of Civil Authority (OCA) claim by a New York City law firm in Bamundo, Zwal & Schermerhorn, LLP v. Sentinel Ins. Co., 2015 WL 1408873, 2015 U.S. Dist. LEXIS 39409 (S.D.N.Y., Mar. 26, 2016). The policy extended coverage to loss of business income caused by an OCA issued “as the result of a Covered Cause of Loss,” but it excluded flooding from the definition of that term.
The insured was a law firm with offices on John Street in lower Manhattan. On October 28, 2012, the Mayor of New York City issued an executive order evacuating all homes and business located in the area. Superstorm Sandy made landfall the next day, and parts of lower Manhattan – though not the area around the policyholder’s offices – quickly experienced “never-before-seen flood levels.” On October 31st, a second executive order continued the evacuation and directed that buildings could only be reoccupied after being inspected and declared safe; 14 more orders were subsequently issued extending those restrictions. The law firm’s offices were ultimately declared available for occupancy on Christmas Eve, and the policyholder moved back in on January 4, 2013.
The policy afforded coverage for
the actual loss of Business Income you sustain when access to your scheduled premises is specifically prohibited by order of a civil authority as the direct result of a Covered Cause of Loss to property in the immediate area of your scheduled premises.
This extension of coverage was subject to a 72-hour waiting period deductible and limited to a period of 30 consecutive days. In addition, the contract of insurance excluded loss caused by water, including flooding, from the definition of what constituted a covered cause of loss. The insured made claim for loss of business income for the entire evacuation period (October 30th through January 4th), and it filed suit for breach of contract and bad faith after the insurer denied. Read more ›
Eight large PSEG generating stations and a number of smaller distribution facilities were damaged when Superstorm Sandy came ashore in New Jersey on October 29, 2012. The utility’s current estimate of the loss exceeds $500 million. It was undisputed that a storm surge – which the court described as “a hurricane-generated inundation of water” – of “record-breaking height” caused the lion’s share of the damage.
The insured operated the Amish Connection Store in Crossroads Shopping Mall in Waterloo, Iowa. Rooftop drains discharged into a 4” cast-iron drainpipe that ran above the store’s ceiling tiles and then down the back wall of the space and into a storm sewer. The pipe was leaky and extensively-corroded, and it burst during a rainstorm on June 14, 2010, flooding the store and causing substantial damage to the policyholder’s inventory, office supplies, and records.
On February 6th, an intermediate level California appellate court held that a product contamination policy only covered contamination that occurs during or after manufacturing operations by the insured, meaning that there was no coverage where the policyholder’s product was found to be adulterated because it used an ingredient that had been contaminated by a third-party supplier. The decision is 
The insured was Broome County, the owner of a building in a government complex. During the construction of a parking garage below the structure, silica dust migrated up an elevator shaft and disbursed throughout all floors of the building. It was undisputed that inadequate dust barriers were what allowed the silica to infiltrate the shaft – it was “a flawed process on the part of the contractors that led to the loss at issue.” Broome County made claim for the resulting property damage, but its insurer, Travelers Indemnity, denied the claim, invoking the two exclusions discussed above.
The insureds, Frederick and Mary Platek, owned a home in Hamberg, New York. On September 7, 2010, a subsurface water main abutting their property ruptured, flooding the house’s finished basement and causing $110,000 in damages. The Platek’s insurance claim was denied by Allstate, their homeowner’s insurer, because the policy contained an exclusion reciting that Allstate “does not cover loss to the property . . . consisting of or caused by . . . 4. Water . . . on or below the surface of the ground, regardless of its source[, including] water . . . which exerts pressure on, or flows, seeps or leaks through any part of the residents premises.”
In 2005, Kasey McDermott purchased a home in Bay City, Michigan and secured homeowner’s coverage from Nationwide. Five years later in 2010, her then-husband Brien Matthews became a licensed medical marijuana patient and caregiver pursuant to Michigan law, and he set up a marijuana growing and processing operation in two rooms in the basement. The area was previously used only for storage and for the couple’s washer and dryer. By January of 2012, Matthews was servicing the needs of four patients, including himself.
Earlier this month a unanimous Florida appellate court joined a number of other states that have held that an all-risk policy exclusion for vandalism and malicious mischief operates to bar coverage for an arson loss. The opinion can be found at 
The case arose after Tri-Union Seafoods initiated a recall in response to the U.S. Food and Drug Administration (FDA) warning about potential contamination. The policyholder’s claim was denied by its product contamination carrier, Starr Surplus Lines, and Tri-Union then filed suit in federal court in California, where it was headquartered and incorporated. Starr’s response was a motion to dismiss based on the contract of insurance’s forum selection clause and/or to transfer to New York pursuant to 28 U.S.C. § 1404(a).
Petrey was a wholesale distributor of goods supplied to convenience stores, one of which was a two ounce “energy shot” drink called “5-Hour Energy.” It hired salespeople for delivery routes, and each of them leased a Petrey storage unit. The salespeople ordered inventory from Petrey’s warehouse, and the insured then delivered the goods to the storage unit for distribution.