NEW YORK (Reuters) -- Fisker Automotive has sued XL Group Plc after being denied insurance coverage over flooding from Superstorm Sandy that destroyed 338 of its Karma plug-in hybrids, worth about $33 million, at a Port Newark, N.J., shipping facility.
In a complaint filed on Friday in the New York State Supreme Court in Manhattan, Fisker said the vehicles had been submerged in more than 5 feet of seawater on October 29 while they were awaiting shipment to dealers across the country.
The Anaheim, Calif.-based startup said it submitted a timely claim to XL Insurance America Inc, whose policy entitled it to a maximum $100 million of coverage for named storms such as Sandy, subject to a deductible and other provisions, only to have it denied on December 20.
David Klein, a partner at Orrick Herrington & Sutcliffe which represents Fisker, said in a phone interview that the dispute centered on whether the cars were in "transit," and which sublimits may apply, if any.
Fisker is seeking a court order that its policy covers the vehicle loss, as well as damages for breach of contract and other remedies.
An XL spokeswoman did not immediately respond to requests for comment. The company is based in Dublin, Ireland, but has a U.S. office in Stamford, Conn.
More than 10,000 vehicles were estimated to have been lost at the New Jersey facility, including several thousand from Toyota Motor Corp.
The denial of insurance coverage followed a series of quality-control and financial setbacks this year at privately held Fisker tied to the launch of the Karma.
Sandy is expected to become the second-costliest U.S. catastrophe in history, trailing only 2005's Hurricane Katrina, with insured loss estimates as high as $25 billion.