My client owns a hotel that was destroyed by a covered peril. The carrier agrees that the Business Income form, CP 00 30 04 02, is liable for a policy limit payment. Reconstruction is agreed to be at least fifteen months. The lost income calculations as per the carrier exhaust policy limits at the end of twelve months. We have settled this claim within two months of the date of loss. There is no disagreement as to valuation, period of indemnity, or that the carrier owes policy limits.

We have asked the carrier to pay policy limits now. They have instead advanced 30 percent of the limit, which they say represents four months of the period of indemnity and will give us more money in a few months, but not the balance of the policy limit until some later unknown date.

With no incurred language present in the form, isn't the policyholder entitled to be paid in full and up front?

Florida Subscriber

The insuring agreement of the policy states, "We will pay for the actual loss of Business Income you sustain due to the necessary 'suspension' of your 'operations' during the 'period of restoration.'" Typically under business income policies payment of loss would be paid as it is sustained, which would be over a period of time just as the insurer in your situation wishes to do. However, since all parties are in agreement regarding the valuation and that the carrier owes the policy limits, the loss payment provision should apply. The provision says, "We will pay for covered loss within 30 days after we receive the sworn proof of loss, if you have complied with all the terms of this Coverage Part and: a. We have reached agreement with you on the amount of loss." If those provisions are met, there is no reason for the carrier not to pay within thirty days.