The insurer denied the insured restaurant's claim for food spoilage and loss of business income when a flood elsewhere caused a power outage. N. Spy Food Co., LLC v. Tower Nat'l. Ins., 2016 N.Y. Misc. LEXIS 1033 (N.Y. Sup. Ct. March 22, 2016). Tower denied the claim based on an investigation which revealed that the claims resulted from an off premises power failure. The utility company verified that the cause of the power failure was due to flood, a cause excluded under the policy. The food loss and business interruption, therefore, did not result from direct physical loss or damage by a covered cause, justifying the denial of the claim. The insured argued that the cause of the loss was not a flood, but the off premise power failure, which was not excluded under the policy. There was no flood at the insured premises. Further, the flood damage exclusion for the insured premises did not apply to premises that was not part of the policy, i.e., premise of the utility company. The policy's exclusions provided: We will not pay for loss or damage caused directly or indirectly by any of the following . . . . . . g. Water [including flood]. The court found that this provision excluded losses caused "indirectly" by flood. The fact that the flood occurred at the utility company's substation did not make the exclusion inapplicable. The flood exclusion applied regardless of the location of the flood. Therefore, Tower's motion for summary judgment dismissing the complaint was granted.
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