Looking At The Limitations Of The Delay Exclusion

By Hilary Henkind (June 14, 2017, 5:40 PM EDT) -- Many commercial property policies, including builders risk policies, contain an exclusion for "delay, loss of market, or loss of use." Oftentimes, a property damage loss leads to some sort of delay, whether it be a delay in production, completion of a project or in opening an insured facility. Read literally, the delay exclusion would preclude coverage for any sort of loss of revenue incurred by the insured, even if the delay or loss of use were the direct result of a covered cause of loss to covered property. Such an interpretation, however, seems to conflict with the inclusion of coverage for loss of business income. In this regard, a policy containing business income coverage obviously contemplates recovery for a loss of revenue during that period of time following covered physical loss or damage when the insured is unable to operate, produce goods, or complete a project. These types of economic, post-loss delay claims generally seem to be covered in those situations where an insured purchases business interruption coverage. Thus, it is necessary to reconcile the delay exclusion with the business income or extra expense coverage grant....

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