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Insurer's $5 million Superstorm Sandy flood claim limit affirmed

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Zurich American Insurance Co. has prevailed in a case before the New York Supreme Court's Appellate Division limiting flood claims to $5 million after 2012's Superstorm Sandy ravaged the East Coast.

In El Ad 250 West L.L.C. v. Zurich American Insurance Co., the New York Supreme Court, New York County, decided that the policy limits of $5 million plainly applied to “all” damages as specified in policy language, including delay in completion losses.

Real estate developer El Ad U.S. Holding Inc. had argued in its initial lawsuit against Zurich in August 2013 that the limits did not apply to its delay in completion losses of $20 million due to flood peril when it could not complete its 250 West high-rise project because of the storm.

“The plain language of the delay in completion coverage form, which incorporated the policy terms by reference, applied the $5 million flood sublimit to 'all' losses, including nonphysical damage losses, such as those resulting from a delay in completion,” wrote the court in its unanimous decision by a five-judge panel Tuesday.

“In light of the policy language, plaintiff's contention that the flood limit applies solely to losses resulting from physical damage is unavailing,” wrote the court in its decision.

The appellate court decision upheld a June 2014 Supreme Court ruling in Zurich's favor that granted the insurer's motion for partial summary judgment and limited the amount it had to pay for delay in completion losses to $5 million.