Law Firm Sues Insurer for Denying Sandy Losses

Lester Schwab Katz & Dwyer, a 57-attorney litigation firm, is suing Great Northern Insurance Co., claiming the insurer wrongfully denied coverage for losses following Hurricane Sandy. Lester Schwab, based at 120 Broadway, said it suffered "significant business losses" and incurred extra expenses when it lost some utility service and couldn't access its office after the Oct. 29 storm. When electrical service and access was restored on Nov. 5, the firm had limited use of the office due to multiple causes, such as lack of heat, the complaint said.

The firm said its policy from Great Northern, a subsidiary of Chubb Corp., insured against loss of business income and expenses incurred as a result of a covered peril. The policy also contained a flood endorsement with $1 million in coverage, according to Lester Schwab v. Great Northern, 652708/2013 (See Complaint), filed in Manhattan Supreme Court. But the law firm said the insurer denied coverage by asserting the loss of power was caused by flood damage to the utility's property, while the office's location did not fall within a flood evacuation area. "The basis of defendant's denial of coverage to plaintiff is incorrect and in breach of the policy," said the firm, which is demanding $490,000 in damages in addition to interest and attorney fees.