Contingent Business Interruption in Context of the Freeze Claims

Contingent Business Interruption

National supply chains were significantly impacted by the February 2021 severe weather and freezes.  Contingent business interruption policy forms provide coverage for business interruption losses due to damage to down stream customers or up stream suppliers.

A critical issue is whether there has been physical damage at “dependent properties”.  There are four categories of dependents:

• • Buyers – accepts materials/services

• • Suppliers – delivers materials/services

• • Providers – manufactures products

• • Drivers – attracts customers

Typical policy provisions state:

We will pay for the actual loss of Business Income you sustain due to the necessary “suspension” of your “operations” during the “period of restoration”.  The “suspension” must be caused by direct physical loss of or damage to “dependent property” at the premises described in the Schedule caused by or resulting from a Covered Cause of Loss.

Thompson Coe is your resource for identifying and evaluating coverage issues arising out of business interruption due to reported damage to a dependent property.