BHS Scrap and Recycle recently filed a lawsuit against Scottsdale Insurance Company in the U.S. District Court for the Southern District of Florida in a dispute over an insurance settlement regarding a fire at a BHS facility in Hollywood.
According to the lawsuit filed Aug. 13, the dispute with the insurance company started after a fire destroyed the BHS location at 5835 Plunkett St. on June 21, 2016.
“As a result of the occurrence there was a complete loss of electrical power and a total shut down of business operations which continued from the date of the fire until Sept. 23, 2016,” the lawsuit stated.
BHS's business remained out of operation for more than three months and was only able to resume its operations after Sept. 23, 2016, at which time it gradually resumed business operations and only returned to regular operations in November 2016, according to the lawsuit.
BHS's said its insurance policy provided limits of $200,000 for business personal property coverage and $500,000 for business income with extra expense and rental value coverage for the subject premises, the lawsuit stated.
According to the lawsuit, the policy also insured a second BHS business location with coverage limits of $600,000 of business personal property coverage and $360,000 for business income with extra expense and rental value coverage. However, that location was closed two months before the Hollywood fire that is the subject of the complaint and there was no loss or claim with respect to the second location, the lawsuit added.
"On Jan. 3, 2018, Scottsdale issued a letter to plaintiffs adjuster in response to the claim and issued payments of $4,006.02 less a $1,000 deductible for business personal property loss and $36,494.57 for the business interruption loss," the lawsuit stated. "The sums paid are but a fraction of the amount to which plaintiff is entitled under its policy of insurance with the defendant."
BHS said it sent another letter on Feb. 9, asking the insurer to reconsider the settlement.
According to the lawsuit, the insurer's response was that "lost business income requires taking into account the total income from all listed named insureds."
"Nowhere does the policy contain such a provision and no language is cited by the defendant that refers to any explicit provision in the policy," the lawsuit said.
Even if the policy had such a provision, the lawsuit stated that the insurer's statement is based on "assumptions that non-insured's business locations profited from the loss sustained at the insured location and that any increased revenue at those other businesses, regardless of who owned them, can be used to offset the losses suffered by BHS as calculated by plaintiff's accountants."
BHS said there is no evidence to establish that the increase in business at the non-insured location benefited the plaintiff or that it was the result of the fire at the insured location.
"Defendant's calculation is flawed and deliberately designed to deprive plaintiff of payment of its claim to which it is entitled under its policy," the lawsuit stated. "Defendant has underpaid the claim and intentionally and wrongfully deprived plaintiff of its contractual rights under the policy of insurance for which it received a premium."
BHS claims it suffered losses exceeding $400,000 and is asking the court to "enter judgment against the defendant insurance company for BHS's recoverable damages under its insurance policy."