Fisker sues XL Group after being denied insurance coverage over flooding from Sandy

Article by Christian A., on January 2, 2013

Because of denying insurance coverage related to damage from flooding, XL Group Plc faces a lawsuit filed by Fisker Automotive. A total of 338 of its Karma plug-in hybrids, valued at around $33 million, parked at a Port Newark, N.J., shipping facility were destroyed by Superstorm Sandy. Anaheim, Calif.-based Fisker filed the complaint last Friday in the New York State Supreme Court in Manhattan.

According to the complaint, the vehicles were submerged in over 5 feet of seawater on October 29 while they were waiting to be shipped to dealers throughout the country. The startup company asserted that it submitted its claim in a timely manner to XL Insurance America Inc. Under the policy, it is entitled to a maximum $100 million of coverage for named storms like Sandy, subject to a deductible and other provisions.

However, the claim was denied on December 20. According to David Klein, a partner at Orrick Herrington & Sutcliffe which represents Fisker, the argument was focused on whether the cars were in "transit," and which sublimits may apply, if any. Fisker is asking the court to issue an order that the policy covers the vehicle loss, as well as damages for breach of contract and other remedies.

So far, no statement has been released by XL Group, which is based in Dublin, Ireland, but with an office in Stamford, Conn. At the New Jersey facility, over 10,000 vehicles were estimated to have been lost. These include several thousand units from Toyota Motor Corp.

Aside from the denial of insurance coverage, Fisker has contended with several quality-control and financial problems this year related to the Karma launch. It’s estimated that Superstorm Sandy would be ranked second in the costliest U.S. catastrophe in history (with 2005's Hurricane Katrina at the top), with insured loss estimates of as much as $25 billion.

Topics: fisker

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