After more than five years, a Nissan dealership has come to the end of the road in its quest to have its insurer, Tower National Insurance, pay for property damage and loss of income the dealership suffered as a result of Hurricane Sandy in 2012.
Nissan suffered millions of dollars in property damage when Sandy destroyed its inventory as well as an entire year of lost business as it recovered from the water damage. After Tower denied the initial claim based on the policy’s flood exclusion, Nissan sought coverage in state court.
Nissan met with initial some success, the same Judge that recently dismissed the case initially denied Tower’s motion to dismiss. After the Appellate Division reversed that decision, Nissan persevered and went back to the state judge with a new theory: the damage was not flood damage, but damage caused by a storm surge, which should be covered irrespective of flood due to a policy ambiguity.
The judge rejected that argument on the grounds that the appellate court had ruled there was no coverage for flood, and surge unquestionably was included.
Undaunted, Nissan got creative and sought to amend its complaint according to the elements of New York’s Consumer Protection Statute alleging that Tower intentionally misled Nissan into buying an ambiguous policy that failed to specifically state that the flood exclusion also excluded damage due to a storm surge.
Clever theories aside, the judge denied Nissan’s request on the grounds that it had presented no evidence that it had been misled by Tower Holding, stating “the proposed new claim is devoid of merit.”
While New York State homeowners have occasionally leveraged the Consumer Protection Act’s prohibition of deceptive trade practices against their insurers, most appellate courts agree that the Act only protects individual purchases for household purposes and courts are understandably less inclined to push the envelope in commercial lines.
While few can accurately predict catastrophe, Nissan’s plight demonstrates the importance of employing experienced professionals to assess and minimize risk before the waters start rising. The attorneys at Ohrenstein & Brown, LLP have earned their reputations as preeminent insurance leaders based on the firm’s global industry involvement at all phases for insurers, reinsurers, insureds, and intermediaries. It is that in-depth experience and understanding that allows us to provide our clients with comprehensive counsel and sound guidance before, during, and after disputes arise.