Hotel Blames an Explosion, Not Flooding, for Its Losses

So, too, did guests willing to pay more than $700 a night for the privilege of not being pampered in quite the style to which they had become accustomed.

The owners of the hotel filed a lawsuit on Thursday against their insurance company and Consolidated Edison, saying that the business lost $2.3 million during the four days that power was out and in reduced occupancy the next 10 days or so, and that the insurance company wrongly denied a claim on its business interruption policy.

The insurance company, Affiliated FM, denied the claim because a flood at Con Edison’s substation on 14th Street caused the power failure, and the business interruption policy does not cover losses caused by flooding, the insurer wrote the hotel’s owner.

The lawsuit, filed in State Supreme Court in Manhattan, raises a different theory: that the bright, loud explosion at the plant caused the power to go out, and that the flood may or may not have caused the explosion.

The suit also accuses Con Ed of acting negligently in not shutting down the substation sooner, as it did other substations.

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