In March 1993, a snowstorm moved through Buncombe County, NC creating problems for Harry’s Cadillac (Harry’s). The storm damaged the building’s roof. While the roof damage did not affect operations, the storm caused lost income because it blocked access to the car dealer. Harry’s filed a claim with Motors Insurance Corp (MIC) and MIC Property and Casualty Insurance Corp (MIC P&C).

MIC/MIC P&C paid for the roof damage but declined the business interruption claim. Harry’s filed suit to recover the lost income. Harry’s position was that the snowstorm rendered the business inaccessible and lost income resulted. Harry’s also argued that a loss caused by blocked access was the same as direct snowstorm damage to the building.

Again, MIC/MIC P&C denied coverage. It stated that Harry’s did not lose income from physical damage creating a suspension of operations. Specifically, since repairs for the roof damage did not affect normal operations and the snowstorm blocking access was not a covered peril, there was no coverage for the loss of business income.

During court proceedings, several items must be reviewed, i.e., pleadings, affidavits, and discovery materials. If any ambiguity is discovered, courts find in favor of the insured party. In this case, the meaning of the policy language was the focal point. The court examined the policy language. It noted that the Coverage Form stated that suspension of operations must be caused by a direct physical loss or damage to the premises. It read in the policy Definitions that coverage begins with the date of the direct physical loss caused by or resulting from a covered cause of loss. Further, the policy’s Covered Cause of Loss form defined loss as the “risk of Direct Physical Loss” and that covered business interruption losses are only those requiring “repair, rebuilding, or replacement.”

The Appellate Court affirmed the trial court’s ruling in favor of the insurer for several reasons. In its opinion, the loss of income was only due to the snowstorm making the business inaccessible, the roof repairs did not affect normal operations, coverage only applied when a covered peril created direct damage that suspends operations, and the snowstorm was not a covered peril.

Harry's Cadillac–Pontiac–GMC Truck Co., Inc., Plaintiff,V. Motors Insurance Corporation and Mic Property And Casualty Insurance Corporation, Defendants. No. Coa96–1211. July 1, 1997.