Total Cessation of Business Is Not Required for BI Coverage.

Advisen just published my article, Just How Much Business Disruption Is Required To Obtain Coverage Under Contingent Business Interruption Insurance Policies?.

In the piece, I explain that:

In insurance coverage cases relating to the application of contingent business interruption coverage, insurers consistently argue that there must have been a “total cessation” of operations, no matter the applicable policy language. They further argue that if there was no “total cessation” of business operations, the insurers are not obligated to provide contingent business interruption coverage. Those arguments, however, should not carry the day.

What is contingent business interruption insurance coverage?

“Regular business-interruption insurance replaces profits lost as a result of physical damage to the insured’s plant or other equipment; contingent business-interruption coverage goes further, protecting the insured against the consequences of suppliers’ problems.” Archer Daniels Midland Co. v. Hartford Fire Ins. Co., 243 F.3d 369, 371 (7th Cir. 2001) (“Archer v. Hartford”). In short, if a third party suffers a business interruption that affects the policyholder, such as “damage to [a third party’s] plant, which was neither owned nor operated by” the insured, “contingent business interruption insurance applie[s] to the losses suffered by” the named insured. CII Carbon, L.L.C. v. Nat’l Union Fire Ins. Co., 918 So.2d 1060, 1068 (La. App. 4 Cir. 2005).

The article discusses what sort of interruption is required under contingent business interruption policies. I argue that:

The plain language of policies that require only an “interruption of business” does not, by the terms, require a total “cessation” or “suspension” of business.

For the complete analysis, click here to read the complete article.

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Disclaimer:

This blog is for informational purposes only. This may be considered attorney advertising in some states. The opinions on this blog do not necessarily reflect those of the author’s law firm and/or the author’s past and/or present clients. By reading it, no attorney-client relationship is formed. If you want legal advice, please retain an attorney licensed in your jurisdiction. The opinions expressed here belong only the individual contributor(s). © All rights reserved. 2009.

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