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Brokers urged to revisit business interruption coverage after 9/11 legacy
Business interruption made up about one third of the attacks’ estimated $32.5 billion insured losses in 2001 dollars, underscoring why policy wording details can drive costly disputes.
Twenty-five years after the September 11 attacks, legal experts say business interruption insurance remains a source of disputes and that brokers should tighten how they review coverage before placing it. According to Insurance Information Institute estimates, business interruption accounted for roughly one third of the attacks’ estimated $32.5 billion in insured losses, measured in 2001 dollars.
Insurance Business notes that litigation since 9/11 has focused on core coverage questions, including how long businesses should be indemnified, whether government closures can trigger coverage, and how policyholders should calculate the income they would have earned.
Reed Smith partner Richard Lewis said there was a greater appetite to litigate business interruption issues after 9/11 than before, estimating about 400 business interruption cases before the attacks and upwards of 1,600 non-COVID cases after. He also urged brokers to ensure negotiated terms are fully reflected in policies, pointing to disputes that arose when completed policies were unavailable and parties argued over binders and which wording applied.
The article highlights that subsequent policy drafting became more specific about whether business interruption coverage is tied to a location, a distinction that has driven litigation for businesses like the World Trade Center operator and Duane Reade’s store. The experts said brokers should test the policy wording against how a client’s revenue works, including cases where reopening elsewhere may not recreate the revenue tied to the original premises or where a nearby “leader property” continues to drive customer traffic.