Wade Clark Mulcahy LLP

In the wake of the civil unrest that occurred during the summer of 2020, the Southern District of New York has clarified its position with respect to insurance policy endorsements for retail storage losses caused by strikes, riots, and civil commotion (SR&CC) in Navigators Ins. Co. v. Goyard, Inc., 2024 WL 360969 (S.D.N.Y. Jan. 31, 2024). In June 2020, the luxury leather storefront owned by Goyard suffered an overnight break-in and a loss of nearly $700,000 in merchandise.

After recounting a few foundational pillars of New York’s insurance coverage law (including that an insurance contract must be read in its entirety, with endorsements taking precedence over standard form language, and that ambiguities in a policy are to be read against the insurer), the court addressed the parties’ dispute. The key point of contention was whether the policy’s SR&CC endorsement, which extended coverage for losses due to “labor disturbances or riots or civil commotions,” “vandalism, sabotage, or malicious acts,” and acts that were “carried out for political, terroristic, or ideological purposes,” would apply to retail storage losses.

The court relied on extrinsic evidence in the form of email correspondence between the insurer and the retail broker, in which the insurer confirmed that the coverage afforded by the policy was to be more comprehensive than its standard-issue policy. This was supported by the significant increase in policy premium corresponding to the endorsement in question. The court granted the insured’s motion for summary judgment and ordered the insurer to reimburse the cost of the losses from the rioting.

However, the court concluded by denying the insured’s request for attorneys’ fees because, generally, an insured cannot recover his legal expenses in an action against a carrier over coverage, even if the carrier loses the suit and is held responsible for the risk.