Case study:
PROPERTY INSURANCE For property insurance, the insurable interest must exist at the time the loss occurs but need not exist when the policy is purchased. The existence of an insurable interest is a primary concern in determining liability under an insurance policy.
ABM Industries, Inc., oper¬ated the heating, ventilation, and air-conditioning systems at the World Trade Center (WTC) in New York City in 2001. ARM also maintained all of the WTC's common areas. At the time, ARM employed more than eight hundred workers at the WTC. Zurich American Insurance Company insured ABM against losses resulting from "business interruption" caused by direct physical loss or damage "to property owned, controlled, used, leased or intended for use" by ABM.
After the terrorist attacks on September 11, ABM filed a claim to recover for the loss of all income derived from its WTC operations. Zurich argued that the recovery should be limited to the income lost as a result of the destruction of ABM's office and stor¬age space and supplies. A federal appellate court, however, ruled that ABM was entitled to compensa¬tion for the loss of all of its WTC operations. The court reasoned that the "policy's scope expressly includes real or personal property that the insured 'used,' controlled,' or 'intended for use.' " Because ABM's income depended on "the common areas and leased premises in the WTC complex," it had an Insurable interest in that property at the time of the loss.'