Insurance Coverage for Droughts, Due to Climate Change : The Case for ‘Loss of Business Income’ and ‘Loss of Use’

This article addresses the issue of insurance coverage for commercial enterprises as a consequence of the recent spate of droughts in the southwestern United States. This almost two-decade long drought results from increasing temperatures and climate change. The article posits that damage or injury to property and lost profits caused by this wave of droughts may be covered by insurance policies. It focuses on businesses — including tourist attractions such as hotels, motels, boat rental facilities, and others — that are so critical to the economies of the southwestern states. I posit that when these commercial enterprises are, or will be, affected by droughts they may be able to recover their lost income and profits via two supplementary provisions or riders to their routinely contracted for Commercial General Liability (“CGL”).This article is the first to explore the use of these riders in the context of droughts. However, such coverage has not been afforded to suspended business operations that lost income due to droughts. The article also analyzes the development of insurance coverage for the riders. Throughout the article I offer hypotheticals that demonstrate how courts and claims people may interpret the riders