The Length of the Road Back from Disaster: Four Rules for Measuring the Business Interruption Period


...obviously create poor incentives. But insurers sometime take the “theoretical” “due diligence and dispatch” rule well beyond its purpose and proper scope — even to the point of ignoring its own delays that led to a longer than necessary period.

The lesson for insurers is this: adjust the claim promptly and diligently, immediately respond to all requests for approvals to do certain work or hire certain contractors, and promptly issue sufficient advances for repairs to commence and continue. If an insurer does those things, it will have “clean hands” and be in a much better position to identify where the policyholder has delayed. All too commonly, insurers blame policyholders for delays caused by the insurer. This leads to frustration too often felt by companies attempting to recover insurance in the wake of a disaster — when its own insurer adds injury on top of injury.


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Gary Thompson

Gary Thompson is a partner with the law firm of Reed Smith LLP in Washington, D.C. He represents policyholders in their pursuit of property and business interruption insurance proceeds. The views expressed herein do not necessarily reflect those of the firm, its attorneys, or its clients, or with regard to any pending cases. The author thanks Michael Raibman for his review.


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