Litigation related to Super Storm Sandy is still going strong; or even still getting into full swing. Recently, New Jersey Transit Corporation filed a lawsuit in New Jersey against numerous insurance carriers seeking $300 million in coverage from Super Storm Sandy damage. One of the issues in the case will involve whether a flood sublimit applies.

Before Super Storm Sandy, New Jersey Transit Corporation obtained coverage from Certain Underwriters at Lloyd’s, Hudson Specialty Insurance Company, Ironshore Specialty Insurance Company, and other excess insurance carriers for a wide array of property and other types of losses. The coverage had limits of coverage for over $400 million.

New Jersey Transit claims it suffered damage to tracks, bridges, tunnels and power stations during Super Storm Sandy. Prompt notice was given following the loss. The excess insurers reached the conclusion that the damages were caused by flooding and that a $100 million flood damage sublimit would apply. New Jersey Transit alleges in the case that the flood sublimit should not apply since the damages were caused by a “named windstorm.” New Jersey Transit had requested the excess insurers confirm in writing they would cover the damages that exceeded the $100 million flood sublimit, and as of the time of filing the complaint, the excess insurers refused to agree.

The complaint seeks damages for breach of contract for the couple hundred million dollars worth of damages claimed to be sustained beyond the flood sublimit.

Whether wind or flood damaged property during Super Storm Sandy is one of the most common issues that parties are dealing with in New York and New Jersey. Policies that excluded or limited flood and had anti-concurrent causation language were common, and this will be sorted through the litigation and opinions of the courts deciding Sandy disputes. We will continue to monitor this case and issue an update as it progresses forward.