Insurance Law

Closed by lack of power after Hurricane Sandy, law firm battles insurer over flooding exclusion

A New York law firm has brought an insurance coverage lawsuit against its own carrier after being forced to close temporarily by Hurricane Sandy.

Great Northern Insurance Co. refused to pay a $250,000 business interruption claim because it said the damage was from flooding, which is excluded from coverage by its policy with Newman Myers Kreines Gross Harris, Harris Martin Publishing (sub. req.) reports.

However, the law firm says that the closure was not because of flooding but because of termination of electric service to the building in which it was located at the time of the storm. Generally speaking, insurance policies are considered contracts of adhesion that are interpreted in favor of the nondrafting party, if ambiguous.

The lawsuit was removed from New York state court to federal court earlier this week.

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