10 ADJUSTINGTODAY. COM A D J U S T I N G T O D A Y Rule Four: When a Third-Party Causes the Delay The BI period likewise includes additional time where delay is caused neither by the policyholder nor the insurer, but by a contractor, subcontractor, code official, or by another factor beyond the control of the policyholder or insurer. Although this type of delay is the fault of neither the policyholder nor the insurer, the policyholder’s coverage should not be blunted when a third party caused the delay. The most common example is contractor delay. Another example is a policyholder with a retail store within a damaged shopping complex, where repairs to the store might proceed sooner, but are delayed because repairs to the larger shopping center must first be completed. In some cases, delay is truly nobody’s fault, such as where a massive disaster depletes an area’s disaster recovery resources. In the aftermath of Hurricane Katrina, or the four successive 2004 Florida hurricanes, the construction and labor market was completely exhausted — there were few if any available contractors, roofers, electricians, etc., to proceed with repairs. In such a case, that reality must be taken into account in setting the length of the BI period. That is fair because in writing property insurance, the insurer agreed to shift the risk of BI losses caused by a disaster from the policyholder to the insurer. In a large disaster like Katrina, an insurer sometimes approaches the “due diligence and dispatch” issue completely in the abstract, as if only that one property is affected and there is an ample supply of contractors at the ready. Such an approach ignores the clear rule that delay and difficulty caused by circumstances beyond the control of the policyholder must be taken into account. This rule also is easily found in the case law, such as in the following cases: • In Zurich American Ins. Co. v. ABM Industries, Inc., 2006 U.S. Dist. LEXIS 28249, at *8 (S.D.N.Y. May 10, 2006), the policyholder provided janitorial services to the WTC building and tenants. The BI period was defined by the time it would take to reestablish the policyholder’s services that were uniquely connected to the WTC. The BI period was thus dependent on a much longer BI period tied to the entire WTC complex over which neither party had control. Id. Where neither party is to blame, the risk shifts to the insurer as part of the insurance contract. • In International Office Centers Corp. v. Providence Wash. Ins. Co., 2005 U.S. Dist. LEXIS 20494, at *15-17 (D. Conn. Sept. 14, 2005), the policyholder’s offices at the WTC were destroyed. The BI period was defined by the time it would take to reopen the offices at the World Trade Center, not at a different location. The BI period was thus dependent on a much longer BI period tied to the rebuilding of the entire WTC complex. • In United Nuclear Corp. v. Allendale Mutual Ins. Co., 709 P.2d 649, 656 (N.M. 1985), there was a dam collapse at a uranium mill. The contractor delay in the design and engineering was added to the BI period, even if such time overlapped with time otherwise excluded as code compliance. “[T]he overall repair delay was complicated by conflicts
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