A Katrina-Related Case That Bears Watching

Northrup Grumman v. Factory Mutual Ins. Co., a $1.2 billion lawsuit by Northrup against its property insurer, is going to be an interesting case to watch.
The suit arises out of damage to Northrup’s shipyards in Louisiana and Mississippi caused by Hurricane Katrina. It was filed in Los Angeles County Superior Court in November, and the insurer removed it to federal court. The complaint alleges Factory Mutual provided excess coverage of $19 billion for Northrup facilities worldwide including those on the Gulf Coast, including hurricane damage, but not flood damage. The complaint says that Factory Mutual in October refused to provide coverage for “flood perils” such as wind-driven water and storm surges even though they are not contained in the definition of “flood” in the policy.

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