## Facts

- ABM Industries, Inc. provided janitorial, engineering, lighting, and related services throughout the World Trade Center (WTC) complex and to nearly all WTC tenants; more than 800 ABM employees worked there.
- ABM’s work involved extensive physical presence and functional control at the WTC, including operating building systems (e.g., HVAC), controlling service elevators, maintaining office and storage space onsite, and using janitorial closets and sinks on every floor.
- Zurich American Insurance Company issued ABM a multi-location “blanket” property and business interruption (BI) policy for Feb. 1, 2001–Feb. 1, 2002.
- The policy provided a $127 million blanket limit for property and BI losses, covering property “owned, controlled, used, leased, or intended for use by” ABM.
- The policy also included contingent business interruption (CBI) coverage for “properties not operated by the Insured,” subject to a $10 million sublimit.
- After the WTC was destroyed on September 11, 2001, ABM sought coverage for substantial BI losses tied to the interruption of its WTC-based operations and revenue.
- Zurich filed a declaratory judgment action seeking a determination of coverage scope.
- The district court largely limited ABM’s BI recovery to the $10 million CBI sublimit (except for loss tied to ABM’s own physical property at the WTC), reasoning that ABM did not own/lease/occupy most affected premises.
- ABM appealed, arguing its use and operational control of WTC spaces meant the loss implicated “insured property at an insured location” under the main BI provision.

## Issues

1. Whether WTC common areas and tenant spaces integral to ABM’s services constituted “property owned, controlled, used, leased, or intended for use by the Insured” and thus “insured property at an insured location” for direct BI coverage.
2. Whether ABM’s operational role at the WTC made the affected property “operated by the Insured,” placing the loss outside the CBI clause for “properties not operated by the Insured.”
3. Whether ABM’s WTC-related BI losses were subject to the $127 million blanket limit for direct BI rather than the $10 million CBI sublimit.

## Decision

- The Second Circuit reversed in part and remanded.
- It held the district court construed “insured property” and the BI/CBI distinction too narrowly by effectively treating ABM’s WTC-dependent business as purely contingent on third-party property.
- The court concluded ABM’s extensive use and control of WTC premises could qualify as “insured property” for purposes of direct BI coverage, potentially permitting recovery under the $127 million blanket limit rather than restricting recovery to the $10 million CBI sublimit.
- On remand, the district court was directed to determine which components of ABM’s claimed losses were directly tied to property ABM “owned, controlled, used, leased, or intended for use,” and which were truly contingent on non-operated third-party property.

## Legal Principles

- Insurance policy terms are interpreted under their plain meaning, viewed in context and consistent with the insured’s reasonable coverage expectations where the language supports that reading.
- “Insured property” defined to include property “owned, controlled, used, leased, or intended for use” can extend beyond title or leasehold interests to property the insured functionally uses or controls in its operations.
- CBI provisions addressing loss from damage to “properties not operated by the Insured” are generally aimed at classic contingent risks (e.g., supplier/customer premises), and do not necessarily apply where the insured’s business is embedded in operating the affected premises.
- Whether a loss falls within direct BI coverage or a CBI sublimit depends on the insured’s operational relationship to the damaged property and the causal link between that property damage and the claimed income loss.

## Conclusion

The Second Circuit held that ABM’s operational use and control at the WTC could bring its September 11 business-interruption losses within the policy’s direct BI coverage, not automatically within the contingent BI sublimit, and remanded for allocation consistent with that interpretation.


Zurich American Insurance Co. v. ABM Industries, Inc., 397 F.3d 158 (2d Cir. 2005)