Fire Damaged Apartments
The Length of the Road Back from Disaster Four Rules for Measuring the Business Interruption Period
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In Constitution State Ins. Co. v. Werner Enterprises, Inc., 1987 U.S. Dist. LEXIS 6023, at *4 (E.D.La. 1987), a restaurant was damaged as a result of flooding caused by a hurricane. Insurer delay in payment was held to extend the BI period.
In United Land Investors, Inc. v. Northern Ins. Co., 476 So.2d 432, 438 (La. Ct. App. 1985), the BI period did not start until the date that insurer payments were made to allow for such repairs to proceed, even though the “due diligence” period could have been shorter. The BI period was specifically held to include “the time necessary for plaintiff to furnish adequate proofs of loss, submission of accurate estimates for repairs by building contractors and the time required for both parties to engage in negotiations over the amount to be paid.” Id.
In Arnold v. Liberty Mut. Ins. Co, 469 So.2d 1155, 1159 (La. Ct. App. 1985), where a fire damaged a rental property, the BI period to recover for lost rents was extended due to insurer delay in securing an estimate and funding repairs.
In Salamey v. Aetna Cas. & Sur. Co., 741 F.2d. 874, 877 (6th Cir. 1984), where a fire damaged the policyholder's store, the
In United Land Investors, Inc. v. Northern Ins. Co., 476 So.2d 432, 438 (La. Ct. App. 1985), the BI period did not start until the date that insurer payments were made to allow for such repairs to proceed, even though the “due diligence” period could have been shorter. The BI period was specifically held to include “the time necessary for plaintiff to furnish adequate proofs of loss, submission of accurate estimates for repairs by building contractors and the time required for both parties to engage in negotiations over the amount to be paid.” Id.
In Arnold v. Liberty Mut. Ins. Co, 469 So.2d 1155, 1159 (La. Ct. App. 1985), where a fire damaged a rental property, the BI period to recover for lost rents was extended due to insurer delay in securing an estimate and funding repairs.
In Salamey v. Aetna Cas. & Sur. Co., 741 F.2d. 874, 877 (6th Cir. 1984), where a fire damaged the policyholder's store, the
BI period would have been two and a half months, but the insurer failed to pay for repairs. The insurer was held responsible for the additional BI loss caused by its failure to fund repairs.
In Thico Plan, Inc. v. Ashkouti, 320 S.E.2d. 604, 609 (Ga. 1984), where a fire damaged apartments, insurer delay in funding allowed for the policyholder to collect lost rental income beyond the 120 days fixed by the policy.
In A&S Corp. v. Centennial Ins. Co., 242 F.Supp. 584, 587 (N.D.Ill. 1965), where a fire destroyed the policyholder's building & bowling alley, the delay by the insurer and its adjuster in approval of the contractors and plans was held to extend the BI period.
In Saperston v. American &aamp; Foreign Ins. Co., 255 N.Y.S. 405 (N.Y.Sup.Ct. 1932), the court noted that the existence of “evidence which warranted...a [jury] finding that a delay was caused by the acts and conduct of the insurer,” was enough to estop the insurer “from the claim that the [policyholder] did not proceed with reasonable diligence and dispatch.”
Insurers tend to ignore these cases, seeking to place the spotlight on a policyholder's “due diligence.” In fact, policy language does not relate the
In Thico Plan, Inc. v. Ashkouti, 320 S.E.2d. 604, 609 (Ga. 1984), where a fire damaged apartments, insurer delay in funding allowed for the policyholder to collect lost rental income beyond the 120 days fixed by the policy.
In A&S Corp. v. Centennial Ins. Co., 242 F.Supp. 584, 587 (N.D.Ill. 1965), where a fire destroyed the policyholder's building & bowling alley, the delay by the insurer and its adjuster in approval of the contractors and plans was held to extend the BI period.
In Saperston v. American &aamp; Foreign Ins. Co., 255 N.Y.S. 405 (N.Y.Sup.Ct. 1932), the court noted that the existence of “evidence which warranted...a [jury] finding that a delay was caused by the acts and conduct of the insurer,” was enough to estop the insurer “from the claim that the [policyholder] did not proceed with reasonable diligence and dispatch.”
Insurers tend to ignore these cases, seeking to place the spotlight on a policyholder's “due diligence.” In fact, policy language does not relate the
required “due diligence and dispatch” to the policyholder. The BI period simply is defined to end “when with due diligence and dispatch the building and equipment could be repaired or replaced.” This required “due diligence and dispatch” fairly includes the policyholder and the insurer. If the insurer fails to do its part promptly in adjusting the claim and providing advances for repairs, the policy, the case law, and fairness dictate that the insurer's delay must be taken into account in setting the BI period.
Rule Four: When a Third-Party
Causes the Delay
The BI period likewise includes additional time where delay is caused neither by the policyholder nor the insurer, but by a contractor, subcontractor, code official, or by another factor beyond the control of the policyholder or insurer. Although this type of delay is the fault of neither the policyholder nor the insurer, the policyholder's coverage should not be blunted when a third party causes the delay. The most common example is contractor delay. Another example is a policyholder with a retail store within a damaged shopping complex, where repairs to the store might proceed sooner, but are delayed because repairs to the larger
Rule Four: When a Third-Party
Causes the Delay
The BI period likewise includes additional time where delay is caused neither by the policyholder nor the insurer, but by a contractor, subcontractor, code official, or by another factor beyond the control of the policyholder or insurer. Although this type of delay is the fault of neither the policyholder nor the insurer, the policyholder's coverage should not be blunted when a third party causes the delay. The most common example is contractor delay. Another example is a policyholder with a retail store within a damaged shopping complex, where repairs to the store might proceed sooner, but are delayed because repairs to the larger
