Business Interruption Insurance, The Legal Community, and GAAP: Do They All Work in Harmony?

Date of Submission


Document Type


Degree Name

Master of Science in Accounting




Michael Rolleri


Insurance,Business interruption--United States, Insurance,Business interruption--Law and legislation--United States, Accounting--Standards--United States

Call No. at the Univ. of New Haven Library

AS 36 .N29 Acc. 1991 no.1


This research was done to determine if the litagation process interpreted a business interruption insurance policy in any way that would affect Generally Accepted Accounting Principles. Before the effect of the courts could be judged it was necessary to study the policies providing coverage and the various types of businesses that were protected. Once a basic knowledge of the policies providing coverage was acquired research was done on the litigated cases involving the Business Interruption Policy. It was interesting to note that there have been hundreds of cases litigated but that none of the cases reviewed in Massachusetts, Connecticut and Rhode island involved issues that affected GAAP. In almost all cases the litigation was brought to determine coverage issues. After determining that the position of the paper could not be supported by case law, interviews were conducted with various professionals in both the insurance and legal communities. From these interviews and research it was determined that GAAP remained unchanged but that over the last 20 years the insurance policy had in fact changed. Issues and statements previously litigated were changed and the policy simplified to the point that there has been no recent litigation directed towards the business interruption policy. The basic policy to which the business interruption endorsement is attached still continues to be scrutinized by the courts over coverage issues. The results, therefore, do not support the hypothesis that GAAP was affected by legal interpretation of the business interruption policy.