44 Misc. 3d 633
N.Y. Sup. Ct.2014Background
- El-Ad and Zurich dispute coverage under a builders risk policy for flood-related losses arising from Super-storm Sandy (October 2012).
- Policy is a no-fault all-risk builders risk policy with sublimits: $108M for Physical Damage, $7M for Delay in Completion, and a $5M annual flood aggregate limit, plus a flood deductible.
- El-Ad seeks coverage for both physical damage and delay losses; flood losses allegedly include delay in completion.
- Zurich contends flood losses (including delay in completion) are subject to the flood sublimit and the flood annual aggregate limit, and the delay endorsement does not alter these limits.
- The court must interpret the policy’s flood definition, sublimits, and the delay in completion endorsement to determine the recoverable amount for flood-caused losses.
- The court grants Zurich’s cross-motion in part, limiting recovery for flood-related loss to $5M and applying the flood deductible.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether flood sublimit applies to all flood-caused losses including delay in completion | El-Ad argues flood sublimit applies only to physical damage, not to downstream losses like delay. | Zurich maintains the flood loss definition covers all losses arising from a flood, so delay losses are within the $5M cap. | Zurich prevails; flood sublimit applies to all flood-caused loss, including delay. |
| Whether the flood liability limit applies to delay in completion losses caused by a flood | El-Ad contends the delay in completion losses should be excluded from the flood aggregate limit. | Zurich argues the flood aggregate limit covers all losses arising during a flood, regardless of type. | Zurich prevails; flood aggregate limit of $5M applies to all flood-related losses, including delay. |
| Whether the delay in completion endorsement alters the flood sublimits or aggregates | El-Ad asserts the endorsement does not change the flood sublimit/aggregate. | Zurich asserts the endorsement does not increase the policy limits and remains subject to all terms. | Zurich prevails; endorsement does not alter flood sublimits or aggregates. |
Key Cases Cited
- Altru Health Sys. v American Protection Ins. Co., 238 F.3d 961 (8th Cir. 2001) (flood definition broad enough to apply to all losses arising from a flood)
- For Kids Only Child Dev. Ctr., Inc. v Philadelphia Indem. Ins. Co., 260 S.W.3d 652 (Tex. App. 2008) (cases applying broad flood sublimits)
- Gilbert/Robinson, Inc. v Sequoia Ins. Co., 655 S.W.2d 581 (Mo. Ct. App. 1983) (flood loss definitions and sublimits analysis)
- Seacor Holdings, Inc. v Commonwealth Ins. Co., 635 F.3d 675 (5th Cir. 2011) (policy flood provisions not necessarily identical across circuits)
- Six Flags, Inc. v Westchester Surplus Lines Ins. Co., 565 F.3d 948 (5th Cir. 2009) (flood vs non-flood peril per policy definitions)