Hurricane Sandy and Business Interruption Coverage: Legal research, Cont’d.

November 1, 2012

Legal Research: Insurance hurricane SandyThis post continues the post begun by John K. DiMugno, Esquire and Dennis J. Wall, Esquire on the questions surrounding whether Business Interruption Coverage will respond to the destruction wrought by Hurricane Sandy.

BUSINESS INTERRUPTION COVERAGE FEATURE NO. 4.

4.        Resulting in an actual loss of income.

“The Court is aware of no precedent in any jurisdiction that would support interpreting business interruption coverage to cover the loss of a competitive advantage suffered as a result of a theft of intellectual property.”  Coupled Products, LLC v. Harleysville Ins. Co.

BUSINESS INTERRUPTION COVERAGE FEATURE NO. 5.

5.        Due to “necessary suspension of operations”.

            BI “necessary suspension” language alone, held NOT to include anything other than “the risk of a complete cessation of business activities at the covered premises”.  H & H Hospitality LLC v. Discovery Specialty Insurance Co., (massive citation of case law).

Policies may provide for “partial” interruption of business, however, as the policy provided which was at issue in Coupled Products, LLC v. Harleysville Ins. Co., 2011 WL 310357 *4 (N.D. Ind. July 25, 2011).

BUSINESS INTERRUPTION COVERAGE FEATURE NO. 6.

6.        During “period of restoration”.

Also to be addressed in more detail today by John DiMugno.  At this point, no “restoration period” has been held to exist in BI Coverage for “the loss

of a business advantage … which is a matter of law.”  Coupled Products, LLC v. Harleysville Ins. Co. (case involved Michigan substantive law, but the Court cited to decisions from many jurisdictions in this case of first impression).

BUSINESS INTERRUPTION COVERAGE CHECKLIST FOR ALL 6 FEATURES HERE.  See generally John K. DiMugno, Dennis J. Wall, et al, “CATClaims:  Insurance Coverage for Natural and Man-Made Disasters” (West 2012):

  1. Physical damage.
  2. To covered property.
  3. Caused by covered peril during the policy period.
  4. Resulting in actual loss of income.
  5. Due to “necessary suspension of operations”, and
  6. During “period of restoration”.