Business interruption losses may be tough to prove

MINNEAPOLIS—Obtaining proceeds from business interruption claims stemming from the collapse of the Interstate 35W bridge in Minneapolis could be challenging for policyholders, observers say.

It was too early to tell late last week whether there would be a significant amount of claims filed due to the closure of a stretch of the Mississippi River or the loss of the bridge, which carried more than 140,000 vehicles daily. But policy language could make it tough to establish a business interruption claim, observers said.

Business interruption claims that might occur would likely trigger the civil authority or prevention of ingress/egress clauses in many insurance policies, said Paul McVey, managing director and head of global property claims for Marsh Risk Consulting in New York.

Each business interruption coverage has separate limits, making it possible to trigger both simultaneously, said Finley T. Harckham, an insurance recovery attorney at Anderson Kill & Olick P.C. in New York.

Both coverages apply when there is direct physical damage affecting a business, but not to the policyholder's property. Civil authority is triggered when government denies access to a business. Ingress/egress is triggered when a physical barrier, such as debris from the collapsed bridge, interrupts business, the observers said.

The U.S. Coast Guard closed a 10-mile stretch of the Mississippi and a spokeswoman said it could remain closed for days.

But shipping traffic on that stretch of the river was light last week and no ships were waiting to pass through the area, the Coast Guard spokeswoman said.

Barges filled with commodities, such as corn, travel the upper reaches of the Mississippi River. The barges, however, typically do not travel the area where the bridge collapsed, so little impact is expected on that business, said a spokesman for the Minnesota Corn Growers Assn. in Minneapolis.

"It's not really a big deal as far as flowing traffic," the spokesman said. While the bridge collapse greatly affected traffic on roads in the area, rail lines continued to function, he added.

With alternative forms of transportation such as rail being available, it could be tough to argue or collect on business interruption coverage, Mr. Harckham said. Case law has established that under some policies, transportation must be completely prohibited, not just impaired.

Additionally, business interruption policies often contain "distance limitations," Mr. McVey said. Such language limits coverage for civil authority or ingress/egress claims to physical damage occurring within as little as one mile from a policyholder's property.

Every policyholder would have to examine their particular policy language, Mr. McVey advised.