Our client had a fire loss at a strip mall in Topeka, KS. The insurer agreed to pay policy limits on the structure on an ACV basis. The insurer's forensic accountant calculated the business income loss through the period of restoration to be in excess of their $50,000 policy limits. However, they have only offered to pay three months of the business income coverage since the insured is unable and unwilling to repair or replace the property with the proceeds. Before the loss, the insured had no intention to retire or otherwise dispose of the property. We contend that the BI coverage is due and payable through the period of restoration. We do acknowledge that the extended period of indemnity in the policy would not be payable if the insured does not rebuild. Is the insurer responsible to pay the business income loss through the period of restoration if the insured does not intend to rebuild?

Kansas Subscriber

According to the definition of the "period of restoration", the insured must either repair, rebuild or replace operations (at the described premises or at a new location) in order for the business income coverage to apply. However, under Loss Conditions, paragraph d. of Loss Determination provides as follows: d. If you do not resume "operations", or do not resume "operations" as quickly as possible, we will pay based on the length of time it would have taken to resume "operations" as quickly as possible.