Retained by counsel for carrier seeking recovery from the insurance agency based on material misrepresentations regarding the fire protection system required by the carrier to insure a hotel. Engagement required analysis of communications between insured/agency and managing general agent relative to carrier underwriting guidelines and non-compliance with inspection requirements. Litigation ensued following initial denial and later payment for a total fire loss to the hotel. Attorneys Jennifer Martin and Daniel Gibson, Wilson, Elser, Moskowitz, Edelman & Dicker (214) 698-8000. Liberty Mutual Insurance Europe v. Cottom/RCI Insurance Group, Case No: CJ-2016-03004 In The District Court Of Tulsa County State of Oklahoma.
Business Interruption Insurance Expert Witness
All industries are exposed to Business Interruption – Business Income – (“BI”) losses. In simple terms Business Interruption can be viewed as “disability” coverage when physical damage (fire, windstorm, flood) to its facilities results in interruption of normal business operations. BI coverage provides funds to replace “Net Income, and Continuing normal operating expenses, including payroll” (e.g. – profits, payroll, loan payments) during the business interruption. Extra Expense (“EE”) coverage is intended to pay for “[extra] expense during the “period of restoration”” The basic idea is to “minimize the suspension of operations” (e.g. – relocation, expedited freight, overtime, additional loan interest). BI/EE is sometimes referred to as Time Element coverage because it covers losses for the period of time required to resume normal operations.
BI/EE insurance policy forms and/or endorsements can be structured to insure claims resulting from:
- Loss of Rents
- Off-premises utilities
- Dependent properties
- Extended Period of Indemnity
- Equipment breakdown / Food Contamination
- Builders Risk soft costs
Customized policy forms may be required for BI/EE loss exposures such as Electronic media (Computers), International operations, Food Borne Illness, Dependent properties, and Seasonal variation.
BI/EE coverage is based on “forward looking” financial assumptions, projections and estimates at policy inception. Partly because of this claims can be among the most difficult to settle. What would the Profit and Loss statement show had the loss not occurred? What is a reasonable “period of restoration”? How did a given “extra expense” item serve to minimize the business interruption?
Call (817) 980-4897 to discuss your case.
BI/EE Coverage Issues
Since Property Insurance policies typically exclude Business Interruption and Extra Expense, coverage is added by endorsement or written separately. Policyholders might consider:
- How do we calculate adequate limits of insurance for BI/EE?
- Have we completed a Business Income Worksheet?
- Where does the money come from to pay ongoing bills after a fire shuts down the business?
- How long can we survive a Business Interruption before we are out of business?
- Do we need an Extended Period of Indemnity?
- How long can we survive on reduced income of 25%? 50%? How long with NO income?
- What 'Extra Expenses' will we have? How will we pay those 'Extra Expenses'?
BI/EE Claims
A relatively small $20,000 fire loss can result in a catastrophic $500,000 BI/EE claim. Without adequate “BI/EE” insurance, the majority of businesses fail to survive an extended period of Business Interruption.
Successful resolution of BI/EE claims depends on:
- Properly structured BI/EE coverage forms and adequate limits of insurance.
- Carriers are obligated to investigate and attempt settlement of the claim in reasonable fashion.
- Policyholders are obligated to make efforts to resume operations as soon as soon as practical.
Various tools and methods are available to document the claim, calculate amount of loss and expedite claim settlement:
- Business Income Worksheets
- Rent rolls pre-loss
- Segregated accounting for pre-loss and post-loss expenses.
- Specialized BI/EE accountants familiar with the nuances of BI/EE may be engaged by policyholder and/or carrier.
- Hard-to-value items may be negotiated in good faith between the policyholder and carrier.
Mr. Daniel has dealt with BI/EE insurance from initial coverage design through final claim settlement. As an agent his experience includes advising clients with BI/EE coverage structure and claims. As an insurance expert witness he has been engaged on various BI/EE issues and negotiated BI/EE claims with carriers.
Our Experience with BI/EE Coverage
Mr. Daniel offers decades of experience with Business Income and Extra Expense coverage structure; representative client industries included:
- Manufacturers
- Retailers / Wholesalers
- Contractors
- Property owners
- Importers / Exporters.
He is frequently engaged as an insurance expert witness (see “Cases”) to provide analysis and opinions on various BI/EE coverage and claims issues related to:
- Business Income Worksheets
- Loss of Rents
- Agreed Value
- Off-Premises Utilities
- Extended Period of Indemnity
- Dependent Properties
- Ordinance or Law
- Computers / Electronic Equipment / Media
- Builder's Risk “soft costs”
- Inland Marine / Ocean Marine
- Boiler & Machinery / Equipment Breakdown
- Coinsurance / Agreed Value
- Business Owners policies
Business Interruption Cases
Retained by counsel defending against a third-party landlord’s allegations of Agents Errors & Omissions and Insurance Bad Faith for ‘failure to procure’ additional insured status. Policyholder’s landlord alleged reliance on being a Certificate Holder on ACORD Certificates of Liability Insurance as grounds for being an additional insured under policyholder’s Commercial General Liability and Environmental Liability policies. Engagement required analysis of insurance requirements in the lease, scope of coverage for additional insureds and/or whether landlord ever requested being added as an additional insured. Landlord’s allegations also included Business Income Loss of Rents during site cleanup. HLT v. AssuredPartners, Case No. 1:18-cv-00045-RP, In The United States District Court For The Western District of Texas, Austin Division. Attorney Lisa Yerger, Macdonald Devin P.C. (214) 499-5116
Engaged by policyholder counsel to analyze NFIP, non-NFIP and/or Excess Flood Insurance issues. Case required analysis of NFIP Flood Zones remapping and Flood Insurance Rate Map revisions for a Hurricane Harvey loss at an uninsured location. Agency was retained under terms and conditions of a fee-based insurance and risk management services contract. Attorney Will King, Feldman and Feldman, PC (713) 986-9471. The Harris Center v. Higginbotham, Case No. Case No. 201812120 In 80th District Court, Harris County, Texas.
Retained by policyholder’s counsel to opine regarding material misrepresentations made by the wholesale agent/intermediary in placing a large apartments/condominiums enrollment policy. Misrepresentations included the structure of self-insured retentions, towers of policy layers with multiple carriers, stop-loss limits and failure to add/delete properties when requested. Case required analysis of issues including Agents Errors & Omissions, Insurance Bad Faith, Commercial Property and Business Income Insurance. Property Risk Services Management v. Jonathan Hilsher, Risk Placement Services, et al, Cause No. DC-18-04287 In The 193rd Judicial District Court, Dallas County, Texas. Attorney Tim Soefje, Seltzer Chadwick Soefje & Ladik, PLLC (469) 626-5180.
Engaged by defense counsel to address allegations of Insurance Agent E&O / Bad Faith involving Business Income – Rents insurance. Dispute resulted following a restaurant fire loss and subsequent carrier denial of landlord’s claim for Rents coverage under tenant’s Property insurance policy. Case required analysis of insurance requirements in a building lease, numerous years of tenant and landlord carrier/coverage histories and associated Certificates of Insurance. Attorneys Bill Threlkeld and James Wilcoxen, Fenton, Fenton, Smith, Reneau & Moon, PC, (405) 235-4671. PWB v. Frates Insurance, Case No. CIV-17-387-R, In The United States District Court For The Western District of Oklahoma.
Engaged by policyholder counsel to analyze and opine on issues relative to Agents Errors & Omissions relative to Business Income coverage. Dispute resulted from Insurance agency’s failure to follow up with policyholder on carrier request for Business Income underwriting information at a new location. This failure resulted in partial denial of a Business Income claim when a building collapsed. Attorneys Mike Abrams and Kim Winter, Lathrop Gage, LLC (816) 460-5530. Axiom v. Marrs & Davolt, Case No. 16CY-CV00586 Division No. 5, In the Circuit Court of Clay County Missouri.
Engaged by counsel defending insurance agent against Agent Errors & Omissions failure to procure allegations. Case involved carrier notice to the insured that the flood peril would be removed at renewal of its property policy. Agent received no response to NFIP flood quotes provided to the policyholder. Policyholder now asserts that it instructed agent to procure NFIP replacement policies for two locations which subsequently sustained uncovered flood losses. Attorney Anthony Green, Winget, Spadafora & Schwartzberg, LLP (212) 221-6900. Pinnacle Property v. Haylor Freyer & Coon, et al, Index No.: 2016EF2833, Supreme Court of The State of New York County of Onondaga.
Engaged by policyholder counsel as their designated Property and Business Income expert to opine regarding claims handling for two Business Interruptions resulting from one water loss. Case involved partial claim denial for a furniture store’s second temporary business closure. Attorney Michael Collins, Hill Farrer & Burrill LLP, (213) 620-0460. Leather Expo, Inc. v. California Capital Insurance Co., Case No. BC611176 Superior Court Of The State of California County of Los Angeles Central District.
Engaged by policyholder counsel as their designated expert for Agents Errors & Omissions and Insurance Bad Faith to evaluate issues regarding failure to procure proper insurance coverage. Case involved claim denial of a large wood kiln fire loss due to improperly structured Property. Boiler & Machinery and Business Income Insurance. Attorney Brady Rife, McNeeley Stephenson Attorneys (317) 825-5110. Kustom Kilns v. Nuthak, In Shelby County Superior Court I, State of Indiana, Cause No. 73D01-1502-CT-5.
Engaged by agent’s defense counsel as their designated expert for Agents Errors & Omissions and Insurance Bad Faith. Case involved Property and Business Income Insurance written on a Surplus Lines basis. Dispute resulted from hailstorm claims adjusted on a Per Location/Per Occurrence Wind and Hail deductibles basis. Hipoint v. Pathfinder, et al, Case No. Case No.5: 13-cv-687-D In The United States District Court For The Western District of Oklahoma. Attorney Jim Secrest, Secrest Hill Butler & Secrest, PC (918) 494-5905
Engaged by defense counsel for Surplus Lines broker as their Agent Errors & Omissions and Insurance Bad Faith expert. Case required analysis of Property, Flood Insurance and Business Income claims issues relative to Statements of Value, Margin Clauses and Scheduled vs. Blanket policies. Litigation resulted from disputed values during flood claim settlement. Attorneys David Clark and Jack Urquhart, Beirne, Maynard, & Parsons, LLP (713) 623-0887. Menard v. Wells Fargo and Swett & Crawford; Civil Action No. 10-cv-7592, State of Wisconsin Circuit Court Milwaukee County.
Engaged by defense counsel as their Flood Insurance and Agent’s Errors & Omissions expert. Case required analysis of Insurance Bad Faith allegations resulting from claim denial for Flood Zone A locations. Claim included loss of Property and Business Income under an Inland Marine policy form. Attorney Tom Cooper, Pignato, Cooper, Kolker, & Roberson, P.C. (405) 606-3333. Coast to Coast Power Sports v. Robert Bates Agency, et al; Case No. CJ-2012-03555 In The District Court In And For Tulsa County, Oklahoma.
Engaged by agent’s defense counsel as their Agents Errors & Omissions, Insurance Bad Faith, Business Income and Property Insurance Expert for multiple Hurricane Ike apartment complexes claims. Case involved Surplus Lines, standard of care, and disclosure of material facts relative to coastal windstorm deductibles. Landco v. Consolidated American Services; Cause No. 2010-23329 In The District Court Harris County, Texas, 281st Judicial District. Attorney Kevin Madden, Kane Russell Coleman & Logan PC, (713) 425-7452.
Consulting expert engaged by counsel for carrier and surplus lines agent pursuing recovery from retail agent. Case involved placement issues for a Food Borne Illness policy covering Trade Name Restoration, Loss of Business Income and Incident Response. Following claim denial for an E-coli outbreak, litigation resulted from retail agent’s “failure to disclose material terms” to restaurant franchisees enrolled under a Master policy. Lloyds and Professional Liability Insurance Services v. IMA of Kansas; Cause no. D-1-GN-10-004172 In District Court of Travis County, Texas, 353rd Judicial District. Attorney Christopher White, Lewis Brisbois Bisgaard & Smith LLP (214) 722-7100.
Engaged by carrier’s defense counsel as their Insurance Bad Faith, Business Income and Property Insurance Expert. Case required evaluation of claims handling practices relative to partial denial of water damage and mold claims based on a wear and tear exclusion. Eagles Nest Church v. State Auto Insurance, et al; Cause No. 096254334-11 in The 96th Judicial District Court, Tarrant County, Texas. Attorneys Charles Mitchell and Ray Palmer, Naman Howell Smith & Lee, PLLC , (817) 509-2025.
Engaged by policyholder counsel as their Boiler & Machinery and Property Insurance Expert. Case required analysis of Difference-in-Conditions coverage, Business Income and Insurance Bad Faith regarding carrier’s claims handling practices. Case involved Boiler & Machinery cause and origin review of pressure vessel implosion at a Chlor alkali plant near Las Vegas, NV. Olin Chlor Alkali Products v. Continental Casualty, et al, Case No. 2:10-cv-00625-GMN-RJJ in United States District Court for the District of Nevada. Attorney Lorie Masters, Jenner & Block LLP, (202) 639-6076.
Engaged as a Property Insurance Expert by policyholder seeking coverage for Hurricane Ike Builders Risk claims. Case included allegations of Insurance Agent Error & Omission and carrier Insurance Bad Faith. Case required expertise with construction agreements relative to ordinance and law coverage, large Wind and Hail deductibles, and Business Income soft costs under Inland Marine builders risk policies. Attorney Windell Snow (316) 263-5959; Construction Services Bryant v. Cincinnati Insurance Company, Case No. 09 CV 3137 in the Eighteenth Judicial District Court, Sedgwick County, Kansas, Civil Department.
Designated by counsel for policyholder as their Flood Insurance and Property Insurance Expert. Case required analysis of excess flood Business Income, funding excess flood deductibles with NFIP policies, and the effect of ‘Other Insurance’ policy language. Attorney Wendy O’Connor, Tallman, Hudders & Sorrentino, P.C., (484) 765-2274. Pine Grove Manufactured Homes v. Indiana Lumbermens, et al; Civil Action No. 3:08-CV-1233, US District Court for the Middle District of Pennsylvania.
Engaged as Property Insurance Expert by a property owner following a fire loss. Case required knowledge of coinsurance, Agents Errors & Omissions, Insurance Bad Faith and Business Interruption. Fuller v. Ramey King and Northfield Insurance; Cause No. 352232972, 352nd Judicial District Court of Tarrant County, Texas. Attorney Barry Hasten, Hasten & Hansen Attorneys, (817) 429-0956.
Designated by plaintiff counsel as their Property Insurance Expert regarding a total loss due to Hurricane Wilma. Provided analysis pertaining to Agent Error & Omission. Case issues involved Florida Windstorm insurance, Business Income and Surplus Lines Insurance placement. Scott Katz & Beth Berry, Butler Pappas Attorneys , (813) 281-1900. TCB Farms v. Oswald Trippe, et al; Case No. 07-1389-CA, Twentieth Judicial Circuit Court, Collier County, FL.
Consulted as Property Insurance Expert for claims under Inland Marine, Boiler & Machinery and Business Income coverage. Case involved damage to a printing press during transport and upon arrival at a new location. Northeast Impressions, Inc., et al v. Camden Fire, et al; Superior Court of New Jersey, Passaic County Docket No. PAS-L-390-07. Tom Lloyd (973) 863-7612 Morgan Melhuish Abrutyn, Attorneys.
Retained by policyholder to negotiate a machine shop total fire loss claim with the carrier. Policyholder was General Machined Products; carrier was Sentry Insurance Company. Engagement required Property Insurance ACV and RC calculations of difficult to value inventory, analysis and calculations for Business Income and assessment of potential bad faith claims handling. Settlement was finalized through the Appraisal process. Attorney Craig Crockett, The Crockett Firm PC (817) 810-0400.
Designated as Business Income and Property Insurance Expert by plaintiff counsel regarding coverage denial for Flood and Windstorm, damages resulting from Hurricane Katrina. Delta Land & Title v. State Farm Insurance Company; Civil Action 06-5374; Section L, Mag. 1; United States District Court for the Eastern District of Louisiana. Attorney Peter Koeppel (504) 598-1000.
Engaged by defense counsel as their Agent Errors and Omissions, Property Insurance and Insurance Bad Faith Expert. Case required expertise with Business Income, Flood Insurance, Surplus Lines & Ocean Marine Insurance. Litigation resulted from partial claim denials for losses during Hurricanes Jeanne and Francis. Attorneys Larry Montgomery & Lee Chase, Glankler Brown, PLLC ( 901) 525-1322 . Dyer Investment Company, LLC, et al v. Marsh & McLennan and Certain Underwriters at Lloyd’s; Case No. 05CV2812-D/P in the United States District Court for the Western District of Tennessee Western Division.
Plaintiff engagement as their expert for Property Insurance, Agent Errors & Omissions & Business Income. Litigation involved a total fire loss to underinsured building and Business Personal Property. Attorney Jeff Stewart – Seikaly & Stewart, Attorneys, (248) 723-5120. Trojan Cleaners, et al v. The Regency Insurance Group, et al; Case No. 2006 611590 CK 6 611590 CK, State of Michigan Wayne County Circuit Court.
Engaged by counsel for plaintiff as an expert for Property, Flood, and Business Income Insurance and to assist with carrier Bad Faith claims handling issues. This case involved Flood Zone determinations and prior Flood claim payments. Attorney John Gabroy – Gabroy Rollman & Bosse, PC (520) 320-1300. Eurofresh v. Travelers Indemnity Company; US District Court for The District of Arizona, Tucson Division, No. CIV 04-6 79 TUCRCC.