Firms Grapple With Insurance Issues Lingering From Sandy
Nearly a year after Hurricane Sandy, law firms are still wrangling with insurance carriers over denied coverage for loss of business.
Several firms have turned to litigation against insurers that denied their business interruption claims, among them, Lester Schwab Katz & Dwyer; Mintz & Gold; Bamundo, Zwal & Schermerhorn; Newman Myers Kreines Gross Harris; and Shapiro Beilly & Aronowitz, almost all of them located in downtown Manhattan.
Generally, the law firms claim they suffered business losses when they had no access to their building or lost power and communications in their office. Some firms said insurers denied their claims on the basis that power failure resulted from flooding on Con Ed's property. Many corporate entities are pursuing similar suits in New York's state and federal courts.
Meanwhile, some firms are sticking with negotiations.
William McKitty, managing director at insurance broker AON, said the broker has five large firm clients, with more than 150 attorneys each, with claims involving business interruption. Some have settled while others are in the process of doing so, he said.
Robert Juceam, of counsel at Fried, Frank, Harris, Shriver & Jacobson, said he has consulted three midsized firms on their business interruption claims.
Fried Frank is in the process of resolving its own business interruption claim, without difficulty, Juceam said. The firm, which had to take temporary space on Park Avenue after Sandy, moved back to its office in late November at One New York Plaza.
Many insurance policies exclude or limit losses caused by damage to off-site utilities, Juceam said. One question is what exactly happened at a lower Manhattan Consolidated Edison substation.
Lester Schwab, a 55-attorney litigation firm at 120 Broadway, said it suffered significant business losses and extra expenses after it lost some utility service and could not access its office after the Oct. 29 storm.
The firm, which is alleging $490,000 in damages, said Great Northern Insurance Co., a Chubb subsidiary, denied coverage on the basis that the loss of power "was caused by flood damage to the utility's property."
But Lester Schwab is arguing that an explosion caused loss of utilities. Coverage is also provided under the policy's flood endorsement, the firm said in Lester Schwab v. Great Northern, 652708/2013, in Manhattan Supreme Court.