Business Owners Insurance In Texas

What if you are a business owner in Arlington, Grand Prairie, Weatherford, Fort Worth, Dallas, or somewhere else in Texas, and your business is shut down for a while? How does your commercial policy help you with lost income?
This was the question in the case, Catlin Syndicate Limited v. Imperial Palace of Mississippi, Inc; Imperial Palace of Mississippi, LLC. This case was decided by the United States District Court for the Southern District of Mississippi. The date of its decision is March 15, 2010.
Catlin Syndicate Limited (Catlin) is an insurer. They insured the casino operator Imperial Palace of Mississippi (Imperial). As the result of damage caused by hurricane Katrina, Imperial suffered a business interruption. Imperial was shut down for several months. When Imperial reopened it made much greater revenue than before the hurricane because many of the nearby casinos remained closed, and people had fewer gambling choices. Catlin agreed to pay Imperial’s claim but there was a dispute as to how the business interruption loss should be calculated.
Imperial declared a loss of $165 million based on both the pre-hurricane income and the post-hurricane revenue. Catlin believed the losses were only $65 million, based only on the pre-hurricane revenue. This discrepancy resulted from the parties’ different interpretations of the policy’s busines interruption provision, which states, in pertinent part:
Experience of the business — In determining the amount of the Time Element loss as insured against by this policy, due consideration shall be given to experience of the business before the loss and the probable experience thereafter had no loss occurred.
The court looked at decisions in other cases where there was similar policy language. The court stated that “historical sales figures reflect a business’s experience before the date of the damage or destruction and predict a company’s probable experience had the loss not occurred,” and that ” the strongest and most reliable evidence of what a business would have done had the catastrophe not occurred is what it had been doing in the period just before the interruption.”
Imperial tried to argue a distinction between the terms “damage destruction” and “loss”. The court said this is a distinction without a difference in the context of business interruption provisions in an insurance contract. They pointed out that the Random House Webster’s Unabridged Dictionary, says damage and destruction are two definitions for “loss”.
This Mississippi Court ruled that in the business interruption provision in the Catlin policy, only historical sales figures should be considered when determining loss, and sales figures after reopening should not be taken into account. The Court also stated that Mississippi law and Texas law are essentially the same in this regards.
This case is not a real difficult case to understand. An Insurance Law Attorney should be able to explain this to a client relatively easily. Usually the commercial insurance cases are more complicated.