Last year when I wrote about Five Towns Nissan v. Universal Underwriters Insurance Company, I mentioned that the case would likely be around in the appellate system, and that has proven true. Recently, a New York appeals court reversed the trial court ruling and held that the policy excludes flood loss and the several million dollar business interruption claim the car dealership presented.1 The trial court opinion last year2 had found coverage for the policyholder’s business interruption claim despite a flood exclusion.
The policyholder argued the special form containing the flood exclusion excluded coverage for direct physical loss or damage to property, but did not tie the flood exclusion to business interruption, therefore, business interruption losses are not excluded by flood under the terms of the policy.
The carrier countered that the policy was clear: To have coverage for business interruption, there must be damage to buildings or contents as a result of a covered loss. Flood is excluded as a cause of loss, so according to the carrier, the business interruption losses are excluded.
A panel of judges for the middle level appellate court held that the trial court relied too heavily on a chart summarizing the policy declarations and neglected the business income and extra expense coverage form. The panel stated:
As there is no issue as to the application of the policy terms excluding losses due to the flooding that plaintiff claims, we grant partial summary judgment to defendant insurance company and make a declaration of no coverage.
It seems as though the policyholder may consider its appellate options from this opinion. We will continue to monitor the progression of the case and provide any updates.
1 Five Towns Nissan, LLC v. Universal Underwriters Ins. Co., et al., No. 651164/2013 Supreme Court of NY, Appellate Division, First Department 2015.
2 Five Towns Nissan v. Universal Underwriters Ins. Co., et al., No. 651164/2013 (N.Y. Sup. Ct., New York City Jan. 16, 2014).