An Atlantic City law firm that suffered downtime due to Hurricane Sandy is suing its insurance company for denying its business-interruption claim.

The shuttering of Cooper, Levenson, April, Niedelman & Wagenheim’s headquarters caused $900,000 in damages, but Harleysville Ins. Co. paid only $25,000 for loss of electrical service, according to the firm.

The suit, filed in state court in Atlantic County on May 7 and removed to federal court in Camden on June 26, seeks a declaratory judgment that Harleysville owes the firm coverage.

It also accuses the insurer of engaging in unfair claims-settlement practices, deceptive conduct, misrepresentations and false information by issuing the policy and then improperly denying the claim, in violation of N.J.S.A. 17:29B-4.

Cooper Levenson also seeks compensatory and punitive damages under the Consumer Fraud Act.

The firm cites Gov. Chris Christie’s order for mandatory evacuation of the barrier islands in Atlantic County, which went into effect on the morning of Oct. 28, 2012.

The order remained in effect until after Sandy struck on Oct. 30, 2012.

After the storm, the firm made a timely claim against its Harleysville policy, which provided coverage for professional liability and extra expenses as well as business interruptions.

The claim was accompanied by tax returns listing a gross annual income of $28.6 million, on which the $900,000 damages estimate was based, according to the insurer.

On Feb. 1 and 15 and March 26, the insurer denied coverage, except for the $25,000, telling the firm there was no insurance for the claims, the suit says.

Louis Niedelman of Cooper Levenson, who represents the firm in its suit, says Harleysville denied coverage based on the wording of its policy, not for procedural reasons.

“We feel there is insurance coverage, based on the language of the policy,” he says.

Niedelman says his firm will oppose Harleysville’s removal notice, calling it time-barred. The removal was made based on diversity between New Jersey-based Cooper Levenson and Harleysville of Harleysville, Pa.

Harleysville says in its removal notice that it “vigorously disputes” that it “owes plaintiff any coverage under the policy, or that plaintiff can meet its heavy burden to show bad faith or establish entitlement to any punitive damages.”

The attorney for Harleysville, Lance Kalik of Riker, Danzig, Scherer, Hyland & Perretti in Morristown, declines to comment.

Cooper Levenson has 73 attorneys in six offices — Cherry Hill, Trenton, Harrisburg, Bear, Del., and Las Vegas, in addition to Atlantic City.

Business-interruption claims stemming from Hurricane Sandy have proliferated in New Jersey, says Gregory Miller of Podvey Meanor in Newark, who represents insurers in such claims.

He says the claims are typically contingent on physical damage to the policyholder’s property.

But policies for larger businesses often have civil authority coverage, which is triggered by an order by a government authority that prevents the policyholder from conducting business, says Miller.

Civil authority coverage does not require physicial damage, he says.

In claims under civil authority coverage, the carrier examines the language of the government order that triggered the claim, as well as the language of the policy, says Miller.