The court considered whether debris removal coverage in a surplus lines policy applied in conjunction with an endorsement limiting flood coverage for all losses "resulting from Flood to buildings, structures or property." Oxford Realty Group Cedar v. Travelers Excess and Surplus Lines Co., 2017 N.J. LEXIS 570 (N.J. May 25, 2017).
Oxford owned an apartment complex that was insured by Travelers. The property suffered significant flood damage from Superstorm Sandy. Oxford claimed flood damage in excess of $1,000,000 and $207,961 in debris removal costs. Travelers claimed all the damage was caused by flood and applied the $1,000,000 limitation for a flood occurrence. Consequently, Travelers paid Oxford only $1,000,000.
Oxford sued Travelers. Both parties moved for summary judgment. The trial court granted summary judgment to Travelers. The Supplemental Coverage Declaration appeared to allow additional debris removal coverage, but the Limit of Insurance for Flood nullified any coverage for flood damage in excess of $1,000,000. The appellate division reversed. The Policy required up to $500,000 for debris removal coverage in addition to the $1,000,000 flood limit. Further, the Flood Endorsement did not limit Oxford's damages to $1,000,000 because the endorsement applied only to loss or damage to covered property caused by flood, meaning Oxford's building.
The New Jersey Supreme Court reversed. The policy's debris removal coverage was a sublimit, but it was not a self-contained policy provision outside of the application of the $1,000,000 flood limit. The court noted that Travelers was a surplus lines carrier issuing a policy to insure risks that New Jersey insurers refused to cover due to the nature of the risk.
The Flood Endorsement placed a hard cap on the amount recoverable for flood damage. Under the policy, "the most Travelers will pay for the total of all loss or damage caused by Flood" is $1,000,000. Thus, the Flood Endorsement categorically denied any flood damage coverage in excess of $1,000,000. The Flood Endorsement also clarified that the $1,000,000 ceiling would apply even if more than on Limit of Insurance applied, such as the Limit of Insurance for debris removal in the Supplemental Coverage Declarations.
The trial court's grant of summary judgment in favor of Travelers was reinstated.