Insurance Company: About Those 338 Drowned Karmas, We Are Not Paying. Fisker: We’ll Sue

DEC 29 2012 BY JAY COLE 7

Sometime on October 29th, Superstorm Sandy pushed 5 to 7 feet of seawater over Port Newark in New Jersey.  Inside the port was 338 Fisker Karmas awaiting to be sold.

Apparently, none of them were equipped with the “submersible” option installed, so after going on an underwater adverture, some of them caught fire, while others simply were write-offs.  In theory.

Hrm, Maybe The Damage Isn't So Bad And They Can Still Sell Some Of Them (photo via Jalopnik)

According to a report by Reuters, Fisker’s insurance company XL Group PLC (NYSE: XL) promptly denied Fisker’s claim for damages, worth in excess of $33 million dollars.

In response, Fisker has launched a lawsuit against XL:

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, California-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.

At the heart of the matter is the status of the cars when the Superstorm hit.  David Klein, whose law firm Orrick Herrington & Sutcliffe represents Fisker, says the dispute centers around whether or not the cars were deemed to be in “transit” or not, and if sub-limits may apply.  Fisker is seeking a court order to cover all vehicle losses, as well as damages for breach of contract.

Once Again, You Might Want To Sit Down Before We Give You The News Henrik Fisker

While it does seem likely Fisker has a good shot to win this lawsuit ultimately, it also appears that of the 338 Karmas lost, very few (if any) actually had likely been earmarked for a specific destination, and that Fisker was using the New Jersey Port as a “holding pen” of sorts, while waiting on sales.

It has just recently come to light that Fisker’s Finnish plant has been shutdown since July due to a lack of battery supplies (or even more likely-demand), so these cars were most likely moth-balled waiting on customers to drawn them down.

Other automakers, most notably Toyota Motors and Honda also took steep loses on October 29th, as almost 10,000 new vehicles were lost to the storm.  As of now, there is no other known litigation between an OEM and its vehicle insurer.


Categories: Fisker / Karma


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7 Comments on "Insurance Company: About Those 338 Drowned Karmas, We Are Not Paying. Fisker: We’ll Sue"

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I’m not clear as to what being in transit has to do with anything. Say a car carrier truck wrecks on the highway in transit…wouldn’t that be covered by Insurance? I don’t see what this Insurance company has to squabble over. The Insurance company in this case will probably go bankrupt if they have to pay for all of these destroyed cars.

Another punch in the gut for Fisker.

Rule #1 in insurance: Deny

Three Ds of insurance:

1.) delay
2.) deny
3.) defend

My interpretation is that the coverage was for cars “in transit”. And that “awaiting delivery to dealers” (as Fisker puts it) could be considered as “in transit” if in fact they were actually about to be picked up. Instead, it seems the cars were just being stored there, possibly for many months. Perhaps the insurance did not cover indefinite storage.

You usually have to fight with insurance anyway…. whether it’s $3,300 or $33 million..


Thankfully there are exceptions. I did not have to fight Geico, they were great at dealing with the accident and fixing my Volt (it was about $3k). At the end Geico even paid my deductible since they deemed the case as uninsured motorist. I could not be happier with them.

Fisker just cannot get a break. One can point to a variety of mistakes they made, from technical (faulty fan and batteries) to running the business (deal with DE, so many eggs in one basket, possible insurance gap), but for bad luck to hit so many of them in such a spectacular way is really terrible.

I really hope they survive and be able to make a more practical car (the Atlantic). Wonder if consolidation may be coming for the smaller independent EV makers.

The Insurer’s have every scam in and not in the Books to avoid Payouts. To the person wondering about the ‘in-transit’ and asked about a wreck with car or cars on the transport vehicle. Here’s a story for you. Chrysler shipped my wife (from its Canada Factory) on a Covered Wagon Semi a brand new 2011 Dodge Challenger. During the transport, the driver broke down. He off-loaded the car to another covered wagon Semi and that 2nd driver, instead of making the delivery in Orlando . . . took the car past to Miami Beach and proceeded to put 496 miles on the car on the beach. Car had a GPS Satellite Tracking Chip in it and we have every movement of the car on disk. The police were eventually called by Chrysler whom had the car ‘stopped’ on the beach and trucker was arrested and charged with Grand Theft. 3 Insurance Company (Drivers and Brokers and Chryslers) 2 years later continues to refuse to pay out a penny claiming ‘once the car was removed from the transport vehicle, any and all of their insurances’ were null and void. Now, the question would become, what if there was a mishap… Read more »