International Office Centers (IOC) provided temporary executive office space in the World Trade Center (WTC) from the time it opened in 1979 until September 11, 2001. IOC's own office was located there and four of its employees died and its offices and all its records were destroyed when terrorists attacked and destroyed the towers. IOC was insured by Providence Washington Insurance Company (PW) and its property policies covered business income and building and personal property, including improvements and betterments. Based on all the information IOC could produce, PW estimated the business income loss at $272,000 and the property loss at $3,900,000. IOC estimated the business income loss at $2,300,000 and the property loss at $5,600,000. Negotiations lasted more than a year and PW paid approximately $3,500,000 while IOC estimated that it was entitled to approximately $8,260,000. IOC initiated an action claiming that PW violated various state laws in handling the claim. It sought a declaratory judgment regarding the rights and obligations with respect to the insurance policies and damages for breach of contract, misrepresentation, waiver and estoppel, common law bad faith and the Connecticut Unfair Trade Practices Act (CUTPA). It also sought partial summary judgment on portions of the claims for declaratory judgment, common law bad faith and breach of contract. PW sought partial summary judgment in its favor on the CUTPA claim.

Concerning the business income coverage, the policy provided that PW would pay for the actual loss of Business Income sustained by IOC due to the necessary suspension of its operations during the period of restoration. Both parties agreed on the date on which the restoration period and the suspension of operations began. The court determined the proper end date to be the date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality. IOC argued it ends when its office at the WTC should be repaired, rebuilt or replaced. PW contended it ends when IOC's office should be repaired, rebuilt or replaced and that there was no geographic restriction on where that office could be. The correct understanding was based on the meaning of "property at the described premises." The court determined that the WTC was IOC's only place of business from 1979 to 2001 and that its business model was tied to and depended on its geographic location in the WTC. It found that the term "operations" was defined as the leasing of temporary executive office space at the World Trade Center. The insurance policy defined "operations" and "property at the defined premises" in a particular way. Because of that, the court had to conclude that it required payment for business income losses for a period of restoration during which IOC had the opportunity to resume its operations. Those operations were providing temporary office space at the World Trade Center.

Concerning the property policy, IOC sought a declaratory judgment that the policy was valued rather than open and established an agreed value to be paid in case of a total loss. The Commercial Property Supplemental Declaration included Optional Coverage for "Your Personal Property." The "Agreed Value" was $3,380,000 and $2,250,000, for a total of $5,630,000. IOC argued it was entitled to this entire amount because it suffered a total loss. PW argued that the Agreed Value provision was relevant only to the issue of coinsurance but the policy stated that coinsurance did not apply to covered property to which the Optional Coverage applied. The court found PW's reasoning clearly contrary to New York law on agreed value policies and stated that the inclusion of the term "valued" and a numerical value rendered the policy valued rather than open. The court concluded that the policy was valued at $5,630,000 and, because the loss was total and not disputed by the parties, IOC was entitled to recover the full amount.

International Office Centers Corporation , Plaintiff, v. Providence Washington Insurance Company, Defendant. U.S. District Court, District of Connecticut. Civil Action No. 3-04-cv-990 (JCH). Filed September 14, 2005. 2005 CCH Personal and Commercial Liability Cases. Paragraph 48,029.