ADJUSTERSINTERNATIONAL.COM 3 on St. Thomas when Hurricane Marilyn struck in 1995, causing damage to the hotel and a lengthy shutdown. In June 1996, during the middle of the BI period, BA Properties sold the hotel. The insurer refused to pay BA Properties for any BI loss after the sale date, despite the absence of any assignment of the claim to the purchaser. The court squarely rejected the insurer’s blunting of the BI adjustment, vacating a prior ruling in the same case that favored the insurers (from a judge who later recused himself ). The BA Properties court first framed the issue as whether the insured had an “insurable interest” at the time of the loss.2 The court easily found the insured possessed an “insurable interest,” noting that the Virgin Islands, like Florida and many other states, defines “insurable interest” as fixed “at the time of loss.”3 Based on this temporal fixation of the necessary insurable interest, the court then found that “any change in the insurable interest after the time of loss does not affect the amount that the insured can recover under the applicable insurance policy.” Specifically, the court ruled that the insured could recover “for its business interruption losses for the time period after it sold the Hotel.”4 The court specifically rejected the insurer’s argument that the insured “did not sustain any actual losses after it sold the Hotel and its expenses and profits could not have continued after it sold the hotel.”5 Thus, the court allowed for continuing recovery of a theoretical BI loss, both as to the lost net profits that would have been earned and the continuing expenses that would have been incurred: Thus, the “actual loss sustained” limitation means only that an actual loss must be predictable from past business experience. The further restriction that only those expenses that continue during the business interruption are covered means that the Policy covers only expenses that the insured would have been able to pay had it continued in operation… . To construe this restriction as requiring that BA Properties continue to own the Hotel to be able to recover its continuing expenses would be to stretch it beyond its common meaning.6 Moreover, the insurer has no entitlement to a “credit” for the proceeds from the hotel sale against the amount it owes on the insurance claim. “Any receipt by BA Properties of money from any other source does not reduce the actual loss that BA Properties sustained as a result of Hurricane Marilyn for which the insurers must compensate it.”7 “Even if BA Properties benefited by the sale of the Hotel, the insurers cannot escape their own liability by claiming that benefit as their own.”8 Thus, under the law, the right to recover for BI loss is fixed at the time of the loss and extends to the full theoretical BI period notwithstanding the sale of the property. The result in the BA Properties case is consistent with a very well settled line of cases holding that a policyholder is always entitled to collect BI based upon a full “theoretical” BI period even in circumstances where there is no actual business interruption.9 So even if a property is not rebuilt and there is never any actual BI period, the policyholder The ‘anti-assignment’ clause in a typical policy means only that the policy itself cannot be assigned without consent, but a post-loss claim is assignable notwithstanding the clause.
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