By Richard P. Lewis and Michael N. DiCanio, Attorneys, Reed Smith LLP
In their article, “Cleaning Up the Mess: Business Income Coverage in the Wake of Hurricane Katrina” appearing in the May/June 2010 issue of Coverage, Richard P. Lewis and Michael N. DiCanio examine cases addressing a host of issues concerning Business Income (or “Business Interruption”) insurance coverage in the aftermath of Hurricane Katrina.
These issues include: (1) policyholder assertions that the “wider effects of the loss” should be taken into account to increase their covered Business Income loss; (2) insurer assertions that where a policyholder’s income increased because of post-Katrina conditions there was no actual loss; (3) policyholder assertions that profits on its post-Katrina new types of projects should not bar recovery for loss of work of the type of policyholder’s projects done before Katrina; (4) whether a period of cessation of business triggers coverage for later diminished operations or whether there is coverage only for the period of total cessation; (5) issues as to causation such as whether various post-Katrina events resulting in Business Income loss or Extra Expenses were attributable to a covered peril; (6) whether a policyholder’s loss was attributable to damage at the insured’s premises; (7) how to calculate recoverable continuing expenses beyond loss of profit during the period of restoration; (8) whether post-Katrina aid received from governments or private organizations should offset the amount of the policyholder’s recovery for loss; (9) whether costs incurred by a policyholder in mitigating its loss were covered Extra Expenses under the policy; (10) issues as to the length and tolling of the period of restoration; (11) whether there is Extended Business Income for a Civil Authority order to leave the premises not due to property damage but due to the fear of future property damage; (12) whether there must be a formal “order” from a civil authority to trigger coverage under the Civil Authority provision; (13) whether a policyholder may stack applicable policies with differing limits or sublimits; and (14) challenges to the calculations of business interruption loss, including under Daubert standards.
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