What exactly is a Named Windstorm? Many policyholders ask this very question following hurricanes, tropical storms, tornados, and other storms with high winds. A New Jersey Appellate panel recently questioned parties about the purpose of a “named windstorm” definition in insurance policies. This is just the most recent update to the continued saga of New Jersey Transit’s attempt to receive $400 million in insurance coverage under their policies with Lloyd’s of London and other insurance companies stemming from a Superstorm Sandy loss.
In 2017, the New Jersey Superior Court found that the $100 million dollar sublimit for flood losses did not apply to New Jersey Transit’s claim, noting that the policies define a flood in part as a “surge of surface water.”1 Lloyd’s of London and other defendants appealed the decision.2
At the appellate hearing, counsel for one of the defendants raised arguments that a storm surge is a type of surge, defined within the policy. However, the judges were quick to question if everything is alleged to be covered by the flood definition?
Defendants argued that the purpose of a named windstorm is to add an additional peril entitling New Jersey Transit to coverage on a per-occurrence basis. These additional perils, “cyclone, hurricane, windstorm,” all encompass terms used to define what occurred during Sandy.
A “named windstorm” is defined here as, “wind or wind driven water, storm surge and flood associated with, or which occurs in conjunction with, a storm or weather disturbance which is named by the National Weather Service or any other recognized meteorological authority.”
Based upon this policy definition, New Jersey Transit made a simple and straight forward argument: The damages fell under the “named windstorm” definition and therefore outside of the flood sublimit. New Jersey Transit further noted that the policy definition for flood did not include “storm surge” or “wind driven water.”
While the appellate judges further questioned the difference between a storm surge versus a surge of surface water, it appeared that based upon the questioning, the Appellate Division may be leaning toward New Jersey Transit’s arguments that the “named windstorm” provision is more specific and applicable to this loss. If that is the case, New Jersey Transit will have up to $400 million in coverage versus being capped by the $100 million flood sublimit.
This is an important case not only in New Jersey but other jurisdictions coping with flood sublimits, the definition of storm surge, and the interplay with “named windstorm” provisions. We will monitor this case and keep readers informed of the outcome.
If you have a question regarding how these terms are defined and the practical arguments for greater coverage, please do not hesitate to write me at my email, email@example.com, or call my cell phone: (201) 522-8525.
1 New Jersey Transit Corp. v. Certain Underwriters at Lloyd’s London, No. ESX-L-006977-14 (Superior Court of New Jersey Law Division, Essex County, Aug. 24, 2017).
22 New Jersey Transit Corp. v. Certain Underwriters at Lloyd’s London, No. A-001026-17 (Superior Court of New Jersey, Appellate Division).