Long Beach city officials will recoup $800,000 in a settlement with an insurance company that covered the city’s $10 million insurance policy for flood damage after superstorm Sandy.

City officials had challenged Boston-based Lexington Insurance in April 2013 when the city filed a claim for storm-related business interruptions costs. That claim was denied and the city filed a suit against the company in Nassau County Supreme Court in October 2014. The suit was moved to federal court a month later.

Two years before, in November 2012, the Long Beach Corporation Counsel received the full $10 million value of the policy that covered the city’s storm damage. Long Beach also received $131,616 to cover repairs from wind damage.

“In addition to the property damage to the city, the revenue generating operations of the city of Long Beach were interrupted as well,” the city’s attorneys wrote in the lawsuit in explaining why the city also wanted business interruption costs.

City officials said that Long Beach suffered a total of $3.5 million in business interruption losses.

AIG, which includes Lexington Insurance, notified the city in February 2014, arguing that the claim was already covered in the initial $10 million insurance payment.

Lexington Insurance did not return calls for comment.

Long Beach officials and Lexington attorneys agreed to mediate the dispute this year before Uniondale mediator Michael A. Levy, and both sides reached the $800,000 settlement finalized last month.

“After years of hard work that dates back to Sandy, it’s very gratifying to see such a favorable outcome for the taxpayers,” Corporation Counsel Rob Agostisi said in a statement. “There were some disputes along the way relative to business interruption expenses, but Lexington did right by its client in the end.”

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