More than a year after superstorm Sandy, an Inwood car dealership whose building was damaged and inventory devastated is in court with two insurance companies, which it claims wrongly denied it between $4 million and $5 million in payouts.
Five Towns Nissan sued Tower National Insurance Company of Manhattan and a Schaumburg, Ill., company, Zurich American Insurance, in April in State Supreme Court in Manhattan.
The dealership says in the suit that a "storm surge" that did most of the damage to its buildings should not be considered "flood" damage.
At issue specifically is whether a $2,500 or $5,000 deductible per car should have been applied to the Zurich payout for the more than 450 cars destroyed by a storm surge. Five Towns argues in court papers that it should have been $2,500.
Zurich applied the higher amount.
If the loss is considered flood damage, the deductible is higher, meaning that the dealer gets a smaller insurance payout.
Also in dispute is whether the total amount of the deductibles on the cars should have been capped at $300,000, as the dealership claims.
Zurich's reimbursements treated the dealer as having an unlimited deductible, meaning the dealership paid a deductible of $2.2 million, said Five Towns lawyer Anthony Bartell of McCarter & English LLP in Manhattan.
The dealership says the wording of its insurance policy -- which places the word "or" between the words "flood" and "storm surge" -- indicates that the policy considers them two different events.
Legal experts said it's a complex case for the dealership to prove. Attorney Scott Agulnick of Great Neck, who specializes in suits against insurance companies but isn't involved in the Five Towns case, said a judge could determine that the words after "or" are simply to elaborate on the meaning of "flood."
Touro Law Center professor Benjamin Rajotte, who runs a clinic for Sandy victims involved in disputes with insurers, said, however, that in general, ambiguities in policy language often are interpreted by courts in favor of the policy holder. "The burden of disclaiming coverage is on the insurer," he said.
The suit also makes other claims against the insurers, including that Tower improperly refused to reimburse Five Towns for most of the $600,000 in damages to the dealership's building at 600 Burnside Ave.
Representatives for both insurers declined to comment.
Superstorm Sandy struck Oct. 29, forcing Five Towns to close for 23 days. Dealership owner Alex Korchmar said in an interview, "Inside the showroom we had more than five feet of water."
Bartell and the Greater New York Automobile Dealers Association say they know of no other lawsuits against insurers by new-car dealerships on Long Island.
The dealership seeks what it said are appropriate insurance payouts, plus unspecified punitive damages, interest and legal fees.
The dealer group says 40 percent of the 600 dealerships that its 400 members operate were damaged and closed for a time by superstorm Sandy, even though its members include none in New Jersey, where the storm made landfall.
Association president Mark Schienberg said, "In fact, there are still a few today that remain only partially open because of damage caused by the storm."
CORRECTION: An earlier version of this story misstated the amount of damages to the dealership's building.