Risk Management

State high court affirms N.J. Transit entitled to $400M Sandy cover

Judy Greenwald

January 27, 2021 Reprints

Catastrophes Coverage Disputes P/C Insurers Property Lloyd's of London Excess & Surplus Lines More + Less -

The New Jersey Supreme Court on Wednesday unanimously upheld two lower court rulings and held that the New Jersey Transit Corp. is entitled to its full $400 million insurance coverage in connection with damage caused by Superstorm Sandy, rather than just a $100 million sublimit, in litigation filed against Lloyd’s of London and several other excess insurers.

“The Court relies principally on the Appellate Division’s analysis of the plain language of the relevant insurance policies,” the state’s high court said in its ruling in New Jersey Transit Corp. v. Certain Underwriters at Lloyd’s London.

According to court papers in the case, the coverage provided for a $100 million sublimit, but for named windstorm coverage without a sublimit. The insurers had argued the sublimit applied, but the appellate division agreed with the lower court that it did not, and that Newark-based NJT was entitled to the full $400 million in coverage.

The litigation was filed in October 2014. The trial court issued its ruling in the NJT’s favor in September 2017 and the appellate court issued its ruling in November 2019.

NJT attorney Kenneth Frenchman, managing partner of Cohen Ziffer Frenchman & McKenna LLP in New York, said in a statement, “We are very pleased with the court’s decision, which will have a significant impact on coverage for water damage caused by major storms moving forward.”

An insurer attorney in the case had no comment.