Business Income Not Applicable to Unscheduled Building

Commercial Lines - Property	Business Income not Scheduled on Property
Time Element	Carrier Denied Coverage

A paving and excavating contractor (the insured) had a commercial package policy that included a commercial property coverage form covering buildings and business personal property on a blanket, replacement cost basis. The insured also bought business income coverage for one building, but not for the other. When a fire destroyed the building, which was scheduled for building and personal property coverage but not for business income, the claim arose.

The insured filed a $50,000 business income claim for the second building, which was not scheduled for business income coverage. The insurer denied coverage, which prompted the insured to file a legal complaint.

The insured cited the policy language that stated: " . . . will pay for the actual loss of Business Income you sustain due to the necessary suspension of your "operations" during the "period of restoration." The suspension must be caused by direct physical loss of or damage to property at the premises described in the Declarations . . . " (emphasis added.)

The insurer was able to support the fact that business income coverage had never been requested for the damaged building and that the insured was attempting to broaden the definition of premises beyond what was intended in the policy.

The district court of Maryland denied the motion for business income coverage and stated that the insured had used an "irrational interpretation." Webster's Dictionary defines irrational as "not reasonable, absurd, not logical."

The decision discussed in this case was on one of two points brought in the same action. The other point involved coverage for equipment scheduled under inland marine and whether or not it could also be covered under building and business personal property.

Monumental Paving & Excavating, Inc., Plaintiff v. Pennsylvania Manufacturers' Association Insurance Company, Defendant. DMd. No. AMD 96-1722, November 27, 1996. CCH 1997 Fire and Casualty Cases, Paragraph 6146.