A policyholder owned a grandfathered business license, which allowed the business to operate as a legal nonconforming use at its specific address only. This license was the only one of its kind in the county and was tied specifically to that address even though the business owner does not own the building.

The primary value of the business is the possession of this unique license, which affords the owner latitudes in income producing activity not found anywhere else.

A fire occurred at the location and severely damaged the building and business personal property of the business. Due to damages of the building exceeding 50 percent of its value, the legal nonconforming use license has been revoked by the county, never to be reissued at this or any other property. The business owner has effectively lost his business as it was known to be due to this fire. The policyholder contends the nonconforming use license was a vital piece of personal property, purchased as such when he bought the business in 2002 for $200,000. He insured the business personal property for this amount at policy inception.

The insurance company has rejected the policyholder's request for payment of the license as a piece of personal property. This license is a physical item, exclusively owned, that holds intrinsic value, has a distinctive attribute, and is now lost due to the fire.

The ISO CP 00 10 06 07 policy definition of “business personal property” includes “all other personal property owned by you and used in your business.” Does this exclusive license qualify as business personal property?

Florida Subscriber

What the insurer owes for the loss, as personal property, is the paper value of the license. The actual loss, if any, is not personal property. It is the value of the business cash flow and what it is now worth after the loss measurable in dollars.

You could think of this kind of loss as accounts receivable coverage. There is the paper or electronic value of the receivables and then there is the actual loss of what cannot be collected.