Insurance Coverage Q&A: Business Income When Operations Not Resumed

Our client had a fire loss at a strip mall in Topeka, KS. The insurer agreed to pay policy limits on the structure on an ACV basis. The insurer’s forensic accountant calculated the business income loss through the period of restoration to be in excess of their $50,000 policy limits. However, they have only offered to pay three months of the business income coverage since the insured is unable and unwilling to repair or replace the property with the proceeds. Before the loss, the insured had no intention to retire or otherwise dispose of the property. We contend that the BI coverage is due and payable through the period of restoration. We do acknowledge that the extended period of indemnity in the policy would not be payable if the insured does not rebuild. Is the insurer responsible to pay the business income loss through the period of restoration if the insured does not intend to rebuild?