A&D Trading Corp. purchases a variety of products from overseas and sells them to various retail stores throughout the country.

Superstorm Sandy caused 6’ of flood waters to fill their warehouse in downtown Brooklyn. A&D owns the building and utilizes it to store their inventory.

Concerns:

A&D Trading had a business owner’s policy to cover their building, inventory and lost income from numerous perils, except flood. A&D maintained a separate flood policy to cover the warehouse building, but not their inventory. Close to $3,000,000 of inventory was completely destroyed. A&D’s primary insurer denied coverage to the inventory, as loss caused by flood is specifically excluded. A&D’s insurer would cover any wind related damages, as loss caused by wind is covered.

Solution:

AIA thoroughly inspected the warehouse structure, specifically the roof area. Upon inspection of the roof, AIA discovered numerous glass skylights that blew off due to wind. Additionally, about 20% of the roof displayed wind related damages. While loss caused by wind is a covered peril on A&D’s policy, the 6’ of flood waters that consumed the entire warehouse could not be overlooked. AIA argued with A&D’s insurance company that that the damages sustained by wind to the skylights and roof caused rain water to enter the warehouse and cause damage to the inventory. AIA’s team of experts was able to prove to the insurance company that the wind, and subsequent rain water damaged the inventory prior to the flood waters.

Result:

AIA succeeded in getting A&D’s insurance company to reverse their denial and negotiate a 40% recover of the inventory claim, which came to almost $900,000 for A&D. Due to the coverage complexity, and no 100% definitive way to prove the extent of damage the rain water caused to the inventory, a compromise had to be made. This was a very successful settlement AIA made on A&D Trading’s behalf, especially when A&D was initially getting paid $0 for their damaged inventory.