Some lifters broke due to the EQ and the expert, contracted by the insured advised not to use them because If the lifters are used during an earthquake, they will break and the vehicle could collapse, causing additional damages to the lifters and to the property.

We understand the following:

1. The damaged lifters will activate, Property Damages and Business Interruption, because there are physical damages on the property and there is Earthquake coverage. CP 0030 10 12 /CP 1042-1012/CPN 001 11-05)
2. The insured was advised by an expert not to use any of the lifter during aftershocks due to the exposure of breaking, damaging vehicles or injuring an employee and since the shocks still continue today in a Richter Scale 3.03 -3.8 every hour, and according to their Duties they must take all reasonable steps to protect Covered Property. (CP00 30 10 12 C.2. Duties in the Event of a Loss)
3. The insurance company must pay Buss Interruption because, out of the 40 lifters, some suffered physical damaged and the others are unable to be used to avoid further damages, because if they are used during a shock they will be damaged.
4. The period of loss or restoration, depends on nature, lifters could not be used since it is not known when the shocks will stop, however, Buss Income loss will be either for the period of 6 months, (50% coinsurance) or up to the moment aftershock stops whichever comes first.
5. We understand this is a mitigation expense for Business Interruption.
6. Extra expenses is covered since the Physical Loss triggered the coverage.
7. We also understand that the loss should apply only to the section of business dedicated to service.

Please let us know your opinion.

Puerto Rico Subscriber

Your analysis of the coverages as described is largely accurate, except with respect to business income coverage for the undamaged lifters. While as you stated the Duties in Event of Loss condition requires the insured to protect covered property from further damage, the business income coverage requires direct physical damage to covered property for the coverage to apply. Therefore, the business income coverage would only apply to those lifters unable to be used because of the direct physical damage.

In the determination of earthquake occurrence:

• An earthquake occurrence applies to each location covered by the earthquake endorsement and the deductible for that location applies for the earthquake at each location.
• All of the aftershocks and continuing earthquakes are all part of the first earthquake for purpose of determining the 168 hour period for earthquake occurrence. Anything that happens during the 168 hours, earthquake, tremors, shakes, etc., is the earthquake occurrence.
• Because there are two locations damaged, each of the locations suffered an earthquake occurrence so the coverage and deductible applies separately to each location.

Unfortunately, as Puerto Rico is seeing now, one earthquake occurrence can last a really long time. The ISO form is not specific as to what happens after the 168 hour earthquake occurrence. It is our determination that a new earthquake would need to be a separate seismic event occurring after the first earthquake 168 hour period. However, because the ISO earthquake endorsement is not specific, we have reached out to ISO for a proper analysis and will update our analysis if they respond differently.