Lost in the Storm? Increase in Business Interruption Exposures in ‘Wide Area Damage’ Situations

The concept of business interruption (“BI”) cover (or the lack of it) in situations of “wide area damage” has always divided opinion. Until recently case law suggested that insureds were not covered for BI losses consequent on property damage where the underlying cause had also resulted in damage to and “shutdown” of the area surrounding the property e.g. BI losses following damage to commercial premises caused by anearthquake which also restricted access to its surrounding neighbourhood – in that situation operations at the premises would have ceased even if the premises had not themselves been damaged - unless the insured had the benefit of a non-damage extension then under the old law it would not been titled to cover.

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Written by Simon Brooks, Mark Everiss and Naz Gauri, published in Zeitschrift für Versicherungswesen Reinsurance-Edition.