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New York Appellate Division Enforces $2.49 Million Deductible in Superstorm Sandy Case

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Castle Oil Corporation v. ACE American Insurance Co., No.55812/13, 2016 WL 886293 (N.Y. App. Div. Mar. 9, 2016). An intermediate appellate Court in New York recently found that in respects to calculating a policy deductible, the phrase “total insurable values at risk” means the value of insured’s property rather than the applicable sublimit. Castle Oil Corporations submitted a $2,284,239.95 claim to ACE American Insurance Company for flood damage sustained by its Port Morris Terminal during Hurricane Sandy. The subject commercial property policy provided that the flood coverage deductible was “2% of the ‘total insurable values at risk’ per location” or at least $250,000. After, ACE denied the claim on the grounds that the damages sustained by the property were less than the policy’s flood deductible, Castle Oil filed suit for breach of contract. On cross-motions for summary judgment, Castle argued that the phrase “total insurable values at risk” referred to the policy’s $2.5 million flood sublimit, making the deductible $250,000. ACE, in turn, argued the phrase referred to the total value of the Port Morris Property (almost $124.7 million) making the deductible approximately $2.49 million and thus relieving ACE from any liability under the policy.

The trial court accepted Castle’s interpretation of “total insurable values at risk” and granted summary judgment in its favor. The Appellate Division reversed, holding that there is only one reasonable interpretation of the relevant deducible provision and that interpretation supports ACE’s contention that the applicable deductible was $2.49 million and that the claim submitted by Castle Oil did not meet the deductible.