Applying general principles of policy interpretation, the New York Supreme Court recently read a flood deductible provision to provide maximum coverage to a policyholder’s Superstorm Sandy-related flood loss.  Castle Oil Corp. v. ACE Am. Ins. Co., No. 55812/13 (N.Y. Sup. Ct. Jan. 2, 2014).  The commercial property policy issued to Castle Oil, the operator of a petroleum fuel terminal in the Bronx, contained “all risk” coverage, including a specific endorsement extending coverage to loss caused by flood.  A $2,500,000.00 sublimit applied to the flood coverage for locations, like Castle Oil’s fuel terminal, designated as special flood hazard areas by FEMA.  The deductible applicable to such locations was to be “2% of the total insurable values at risk per location, subject to a minimum of $250,000.00.” Id. slip op. at 2.  Castle Oil’s property damage as a result of Superstorm Sandy totaled $2,284,293.95.  The insurer argued that the deductible provision should be read as two percent of the value of all property at the terminal, with the value determined according to the statement of values attached to the policy in the amount of $124,701,000.00.  Id. slip op. at 3.  Under this interpretation, the deductible was calculated to be $2,494,020.00 – more than the amount of Castle Oil’s loss and nearly the amount of the flood sublimit.  Castle Oil, by contrast, argued that the deductible provision should be read as two percent of the value of the property “at risk” at the terminal, with the value equal to the $2,500,000.00 sublimit.  Id. slip op. at 4.  The deductible under that calculation would be $250,000.00.  Ruling in favor of Castle Oil, the court found the phrase “values at risk” ambiguous and construed it liberally in favor of coverage for the policyholder. Id. slip op. at 7-11.  According to the court, the insurer’s interpretation rendered the phrase “at risk” without meaning.  Id. slip op. at 9.  Moreover, the statement of values the insurer relied upon for its interpretation included an express disclaimer stating that the values therein were set forth “for premium purposes only.”  Id. slip op. at 8.  Ultimately, the insurer’s desired result – a deductible calculated to be only a few thousand dollars less than the applicable sublimit – was inconsistent with the reasonable expectations of the policyholder.  Indeed, the court noted that such a construction would render the purchased flood coverage illusory.  Id. slip op. at 9.