Cold and snowy weather during the winter of 2013-2014 set numerous records in many parts of our country. Before the cold and snowy arctic weather could fade out as a distant memory, Mother Nature was back at it—treating some regions to extreme cold and snowy conditions since early fall/ late summer.
The FC&S Bulletin Questions and Answers opined that damage caused by dead bodies is covered. A federal judge recently disagreed, finding damage caused by dead bodies was not covered.
Continue Reading Dead Bodies–Are They a Covered Peril?
Insurance defense attorneys often argue coverage does not exist for losses the insurance industry routinely pays and recognizes as covered. I believe Ergas v. Universal Property and Casualty Insurance Company,1 which I discussed yesterday in Chipped Tile Claims Get Marred, misconstrues longstanding insurance contract interpretation. Hopefully, the policyholders’ attorneys file a motion for rehearing, because the judges got it wrong and the insurance industry knows it.
Hurricane Sandy claim denials are starting to be issued. This is typical; hurricane claim denials usually start four to six weeks after the catastrophe. I cannot overemphasize the value of FC&S materials and other insurance industry reference sources when researching whether Hurricane Sandy denials can stand up to challenge.
The 2011 losses Japan and Thailand rippled through the oceans as many realized that our global economy had become highly interdependent and supply chain disruptions were costlier than ever anticipated. A few months ago, global insurers revamped their Contingent Business Income questionnaires and applications in an effort to understand how deeply interrelated and exposed their insureds’ supply chains are.
A recently published FC&S Bulletin answered a nuanced coverage question for a situation that is all too common in landlord tenant relationships. In the scenario, the tenant purchased a Business Owner Policy form (BP 00 03). The landlord was required to remove underground tanks from his property and the removal process suspended the tenants’ business operations.
When measuring a business income loss, a company can treat all payroll and benefits (if directly related to payroll, i.e., FICA, worker’s compensation, etc.) as “continuing expenses” in its accounting worksheet as defined in CP 00 30 10 (Business Income and Extra Expense Coverage Form). If the policy has an Ordinary Payroll Exclusion or Limitation, the company can maintain all non-hourly payroll as a continuing expense in the worksheet and submit the payroll for the hourly employees under an additional coverage endorsement, which is purchased for a specific number of days (e.g., 30, 60, 90, and up to 365) to be recovered within the Period of Restoration.
Relying on anti-concurrent causation clauses, several insurers have adopted a method of claims adjusting where business income claims are denied in whole if the property suffered damage attributed in part to an excluded cause of loss. In most states, this type of business practice is wrong and contrary to public policy. For an in depth analysis on the legal framework of anti-concurrent clauses, I encourage you to read Chip’s post, Anticoncurrent Causation Clause Explained in Relation to Hurricane Losses.
Many clients and claim professionals often have questions about their deductible responsibility toward their business income claim. Typically, if the property has sustained physical loss or damage, the insured will be required satisfy the applicable peril-deductible to receive benefits to repair or replace the damaged property and trigger the business income coverage. However, insureds should keep in mind that while there may not be an additional monetary deductible to trigger business income coverage, their business income claim will probably be subject to a waiting period of 24-72-hours, which often is the most crucial period of time after the loss. This waiting period is supposed to encourage the insured to take prompt and adequate repair measures to mitigate the business losses. However, any lost profits during this waiting period are not recoverable, and many consider this waiting period a “time deductible.”
Finding out that your insurance policy does not provide coverage for your losses is probably one of the hardest pills to swallow. For that reason, commercial property owners should pay careful attention to the landlord-tenant insurance responsibilities before entering into leasehold agreements.
Continue Reading Are your tenants covered? – Understanding Business Interruption Claims, Part 53