Insurer MAPFRE alleges the insured GPH and TAIF were able to open their facilities eight (8) days after the Hurricane Maria passed over Puerto Rico on Sept. 20, 2017. After that period of time MAPFRE is applying the “Loss Of Market Exclusion”, because MAPFRE says no one was buying cars at that time. Insured alleges they did open their facilities but were not fully operational because of:

  1. Severe damages in their buildings;
  2. Lack of employees, many were solving personal issues due to the hurricane.
  3. No electricity on basically the whole island, partial operation depended on an electric generator.
  4. Electricity/Generator: |
    • Depended on mechanical maintenance – difficult to find mechanics.
    • Generator maintenance – No generator parts were available on the island.
    • Difficult to find diesel and rates skyrocketed up to $9.00 per gallon if you were lucky to find a supplier.
    • Use of generator – had to be used for a limited period of time as business was not fully operational.
  5. Communication:
  • All systems-Phones-Internet-Cellular- were down in some cases for months; people had to go in their cars to different parts of the island to find coverage and to communicate with their families around the island. You could see lines of cars in some areas to find coverage.
  • Very difficult to recharge cellular phones, there were not many solar chargers available.
  • Banks (needed to approve loans) – communications were down, and it was not possible for banks to review or qualify clients as they would in normal times.
  • All communication and electricity towers collapsed and took many months for repairs.
  • Lack of diesel and gasoline made it difficult to use messengers, or to make personal deliveries.
  • Radio stations and TV stations were down also for a long period of time. Battery radios were difficult to find.

Our allegation is that the business was not fully operable at that time.

Puerto Rico Subscriber

In reference to the exclusion for loss of market, you are correct that the policy is not intended to cover economic loss. This exclusion excludes any prospective, or anticipated, profit of the insured, or loss of market.

CP 00 30 10 12 also provides for Extended Business Income. This coverage is designed to enable the insured to recapture its market position following the completion of repairs and the resumption of operations. For example, if the insured sustained a long closure of their operations for repairs, they may not see their customers return right away. The loss of income during this period would be covered by the extended period of indemnity provided for in this Extended Business Income provision.

However, Extended Business Income does not apply to loss of business income incurred as a result of unfavorable business conditions caused by the impact of the Covered Cause of Loss in the area where the described premises are located. In your case, there seems to a number of true extended business income losses that are not a result of the unfavorable business conditions resulting in economic loss. Your case states that the business was not fully operational, and notes that two of the reasons were damage to the buildings and lack of employees, which should be covered business income losses. There may also be some covered extra expense for necessary expenses incurred to avoid or minimize the period of the suspension and to continue their operations, such as the generator and communications expenses.

Only the portion of the extended business income loss that was due to economic conditions caused by Hurricane Maria would be excluded, such as if people were not buying cars. However, you do not present this as an issue, since people were buying cars. So, in essence, there was not a “loss of market”, but rather business income losses due to direct damage from the covered cause of loss.

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