Insurance Coverage Q&A: Business Interruption Affecting Contract

Our insured suffered loss to its leased location in a tornado which occurred on March 3, 2020. The insured’s business operations involved storing and scanning medical documents under a 5 year contract that was active at the time of the tornado. Under this contract, the insured was obligated to scan the medical records, and store the digitized records for their clients. The contract provided for a per page fee for such services that were to be paid when the scanning and digitization services were performed. The income that would have been realized from the scanning of medical records was approximately $4 million. The insured resumed its operations at a new leased space 18 days following the tornado. The insurer denied any compensation for the claimed income loss related to the records because the income that would have been realized from the scanning was future income that would have been realized outside the 18 day “period of restoration”. The insured contends that the records were literally unrecoverable at the time of the tornado, and therefore the lost income was caused by a “suspension” of “operations” that occurred within the “period of restoration”. Is the income loss from the missing records owed under the business income policy (ISO Business Income (and Extra Expense) Coverage Form?