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RXR Sues Insurers For $61M Over Infectious Disease Coverage

1285 Sixth Ave., one of 44 properties RXR claims was covered by insurers against business interruptions owing to infectious disease outbreaks.

RXR Partners, the LLC that owns New York City real estate goliath RXR Realty, is suing a collection of insurance companies for tens of millions of dollars over policies that included infectious disease coverage.

The New York real estate giant claims it purchased “all-risk” insurance policies from seven providers for 44 of its properties prior to the pandemic, 43 of which are in New York state and one of which is located in Connecticut. The policies included coverage in cases of business interruption due to public health emergencies and infectious disease outbreaks, according to a lawsuit filed with New York’s Supreme Court today.

RXR attempted to make insurance claims in July 2020, having purchased policies on or prior to July 28, 2019. But the insurers denied the claim in August 2020, the suit alleges, and have yet to issue any payout to RXR.

RXR is seeking a total of $61,176,315 from the group of insurers, alleging that it sustained losses reaching that amount.

The properties RXR alleges are covered in the suit are largely office buildings, approximately half of which are in New York City itself. Properties include multiple office towers in Midtown — a neighborhood where other landlords have struggled to lease space in recent months — and include the Class-B Beaux Arts building at 620 Sixth Ave., currently leased to WeWork, and 1330 Sixth Ave., which RXR owns with Blackstone and put up for sale in June.

The group of insurance companies includes Continental Casualty Co., Interstate Fire & Casualty Co., Endurance American Specialty Insurance Co., Liberty Mutual Fire Insurance Co., QBE Specialty Insurance Co., Starr Surplus Lines Insurance Co. and Zurich American Insurance Co., according to the complaint.

Quoting its insurance policy, RXR’s lawyers assert the properties were covered by a “Special Perils Business Interruption,” which provides for business interruption or interference as a result of “Infectious or contagious disease manifested by any person while on the premises of the Insured.”

RXR’s lawyers also cited language allegedly in the insurance policies that provides protection against “actual loss sustained and the extra expense incurred by the insured ... as a result of compliance with a Declared Public health emergency.”

The additional cleaning costs associated with the outbreak of Covid-19, as well as purchases such as temperature screening stations, sanitation stations and protective barriers, were also added to RXR’s losses in the filing.

RXR did not immediately respond to Bisnow’s requests for comment.