Zurich Am. Ins. Co. v. ABM Indus. - 397 F.3d 158 (2d Cir. 2005)

Rule:

The only prerequisite to coverage mandated by New York law is that an entity have an "insurable interest" in the property it insures. New York law embraces the sui generis nature of an "insurable interest" and statutorily defines this term to include any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage. N.Y. Ins. Law § 3401 (2002).

Facts:

Appellant ABM Industries Incorporated provided extensive services at the World Trade Center complex (WTC). Appellant was insured against business interruption by appellee Zurich American Insurance Company. Appellee initiated the instant litigation by bringing a declaratory judgment action against appellant, asking the court to determine the extent of its liability to appellant resulting from the loss of the WTC. The district court ruled that, as a matter of law, appellant was not entitled to business interruption (BI) coverage for losses it incurred after the collapse of WTC and granting the appellee’s motion to exclude evidence supporting a two-occurrence claim. Appellant challenged the decision. 

Issue:

Did the district court correctly rule that the appellant insured was no entitled to BI coverage for losses it incurred after the collapse of WTC? 

Answer:

No.

Conclusion:

The court found that the insured possessed an insurable interest in a revenue stream from the premises cognizable under N.Y. Ins. Law § 3401, and that for purposes of BI coverage, the insured "used" and "controlled" property in the same way that an accounting firm "used" office space. Accordingly, the court granted summary judgment in favor of the insured on the issue of BI coverage, and remanded to the district court only for a determination of the insured's damages.