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Arizona Court: Argument that All Business Income Loss Caused by a Wildfire is Covered is “Off Base”

Several weeks ago in White Mt. Communities Hosp., Inc. v. Hartford Cas. Ins. Co., 2015 WL 1755372, 2015 U.S. Dist. LEXIS 50900 (D. Ariz., Apr. 17, 2015), an Arizona federal court underscored that business interruption losses flowing from a wildfire are only covered to the extent that they stem directly from physical loss or damage to the policyholder’s property.  In other words, loss of income due to the fire in general is beyond the scope of such coverage absent a causal nexus with repairs necessitated by the blaze. The policyholder White Mountain owned a hospital in Springerville, Arizona.  On May 29, 2011, a blaze was started by an abandoned campfire in the nearby Bear Wallow Wilderness Area.  The wildfire ultimately

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Posted in Business Interuption, Causation, Contamination, Direct Physical Loss or Damage, Fire, Smoke and Soot, Wildfire
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For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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