New Jersey Transit sues insurers for $300 million in Sandy damages


SANDY AFTERMATH: New Jersey Transit sues insurers for $300 million for damages incurred during Hurricane Sandy due to a coverage dispute.

By Josh Kaib |

New Jersey Transit on Oct. 1 sued a number of insurers for $300 million for damages incurred during Hurricane Sandy, saying its policies for windstorms covered up to $400 million. These insurers instead paid $100 million, citing the flood sublimit in said policies, which limits the payout to $100 million.

New Jersey Transit is the third-largest provider of rail, light rail and bus service in the country, and was hit hard by Hurricane Sandy in Octoboer 2012. Its bus fleets and rail depots were flooded or otherwise damaged; damage to the Hoboken and Kearny railyards alone account for $120 million in damages. Overall, the agency says Hurricane Sandy incurred around $625 million in damages to them, and $342 million expected in federal relief funds, according to

The defendants include Lloyds of London and “U.S. insurers Hudson Specialty Insurance Company, Maiden Specialty Insurance Company, RSUI Indemnity Company, Torus Specialty Insurance Company, and Westport Insurance Corporation”, according to The lawsuit, filed in the Superior Court of New Jersey Law Division in Newark, claims the insurance against a named windstorm like Sandy, or other named storms, overrules the $100 million sublimit in the policies.

The policy sold to New Jersey Transit had four layers of coverage above the $500,000 per-occurrence deductible. The first layer paid $50 million, the second paid $50 million, the third paid $175 million and the fourth paid $125 million. Insurance Journal writes, “With the exception of the first layer provided by AIG’s Lexington Insurance Co., which is not a defendant in this lawsuit, multiple insurers including defendants are responsible for the coverage available in each layer, with each company assuming a certain percentage of each layers’ coverage limit.”

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