Commercial insurance policies may provide private flood coverage. These are not common, but policies should be fully read, and flood coverage is usually found in an endorsement or a Difference in Conditions policy. One question is, “how much flood coverage is available?” A recent case found that the endorsement did not provide a dollar limit to the business income and extra expense claim.1
Continue Reading No Business Income and Extra Expense Coverage Limit to Flood Endorsement
“Extra” is the E that largely stands for the concept of expediting costs which are incurred to reduce the ultimate loss. “These are out-of-the-ordinary expenses.”1 They are differentiated from the normal expenses to repair and replace damaged property covered under the property insurance policy. These expediting costs usually fall into three categories:
Our client owns a large food market. Last summer, it burned down. The client submitted a claim under his business insurance policy from Farmers. The insurance policy included several different types of coverage, such as Business Property, Business Income, Extra Expense, and more. The insured had insufficient insurance limits under his Business Property to replace everything needed to reopen the market. Thus, he sought coverage for those items under Extra Expense coverage. By the plain and clear terms of the policy, these items were also covered under Extra Expense. But Farmers found an excuse to wrongfully deny the claim in a textbook example of how not to interpret and apply insurance policies in California.
Continue Reading Can Business Losses Be Covered Under Multiple Parts of Your Policy?
On Saturday October 12, 2019, several decks of upper floors of the Hard Rock Hotel & Casino under construction just off Canal Street in New Orleans suddenly collapsed. As emergency personnel were engaged in the immediate efforts to rescue and aid the crews working at the hotel site, the City of New Orleans was busy implementing its emergency response teams.
Continue Reading New Orleans Hard Rock Hotel & Casino Construction Collapse Triggers Time Element Coverages
In addition to covering property damage, most first-party commercial insurance policies offer business interruption coverage. Business interruption coverage typically has two different built in coverages: business income and extra expense. Both are intended to assist businesses in the event a covered peril damages business property and impacts business operations.
Continue Reading Business Income and Extra Expense – Understanding the Differences
Business Interruption losses can be complicated, confusing, and for some business the damages are the end of the story. Having the right coverage for your business, your buildings, and the business property can make all the difference for your livelihood if a loss occurs. One additional coverage that is also common to purchase is Extra Expense Coverage. Many of our posts have given insight and case evaluations about Extra Expense claims:
Continue Reading Expenses to Reduce Your Loss are Covered Under Your Business Income Coverage
A law firm in New York was without power prior to Superstorm Sandy making landfall. The reason for the power outage was because the utility company preemptively shut down power for several days prior to the storm as it anticipated there would be significant pre-storm flooding. The insured premises sustained no flooding or physical damage during the storm. However, the law firm made a claim under its commercial insurance policy for loss of business income and extra expense as the office building was without power from October 29, 2012 through November 3, 2012. During that time period, there was no electricity or elevator service in the building.
Many businesses buy business interruption coverage to cover a loss of business income in the event of a covered loss. Business income provisions generally provide benefits for an amount of time designated in the policy, typically termed the period of restoration,1 or until the business is able to resume operations.
Continue Reading Commercial Property Insurance May Cover “Extra Expenses”
Most insurers will automatically cut-off business income loss benefits after a business rebuilds or repairs the damaged premises and opens for business. However, this all-too-prevalent claim practice could be inadequate and harmful if the policy has an extended business income endorsement and post resumption conditions are ignored.
The Fifth Circuit Court of Appeals limited a policyholder’s recovery in its most recent opinion, National Union Fire Insurance Company v. Gulf Island Fabrication (No. 11-30375, March 9, 2012).
On April 29, 2008, four cranes were being used to lift a piece of machinery at Gulf Island Facility’s heavy steel fabrication facility. One of the cranes side-loaded and collapsed, crushing one of the cranes and killing the crane operator inside. The other three cranes were substantially damaged. Shortly thereafter, Gulf Island rented substitute cranes to continue the building operation, ultimately incurring rental expenses in the approximate amount of $11,117,838. One of the cranes was deemed a total loss with a replacement cost value (RCV) of $3,459,807.
Continue Reading A Heavy Loss Is Limited – Understanding Business Interruption Claims