Flood Loss: NYU v. Factory Mutual Insurance

Federal Court rules insurer did not breach its contract when it applied a flood sublimit for damages sustained to New York University (NYU) relating to Superstorm Sandy in 2012.

  The storm inflicted damage to multiple NYU properties, resulting in business interruption loses as well as loses under the policy’s additional coverages. NYU disagreed with their insurer, Factory Mutual, over which limits applied to the claims. Factory Mutual contended they were subject to a $40 million sublimit for flood damages while NYU sought to apply the $1.85 billion aggregate limit to their claims. The court rejected NYU’s argument that the aggregate limit was applicable. The policy at issue unambiguously subjected time element claims – such as business interruption – to the sublimit of liability for the flood.

The court also rejected NYU’s argument that under the expressio unis cannon the lack of specific reference to the sublimit within a policy’s time element implied that only the $1.85 billion limit was applicable. The court found no ambiguity in the policy and refused to apply interpretative tools to create ambiguity where none otherwise existed.