Civil Authority Coverage & COVID-19 in New York City

Businesses that have had to close due to mandatory state, local, and federal shutdown orders during the COVID-19 pandemic may be allowed to claim coverage under their business interruption insurance policy’s “civil authority” rider. Individual insurance policies vary widely, so it’s a good idea to consult with a knowledgeable attorney to determine your eligibility for such compensation.

If you have been denied coverage, do not accept the denial at face value. Insurers are notorious for balking at paying perfectly sound policy claims. If your insurance company denies your appeal on a legitimate claim, you have the right to pursue compensation by filing a business interruption insurance lawsuit, alleging that the insurer has made a clear breach of contract, good faith, and fair dealing.

If you need a New York City Civil Authority Coverage Lawyer, consider Douglas and London. We have the resources and tenacity to pursue the maximum value of your business interruption claim and win. Contact us to speak with an experienced New York City business interruption insurance attorney. Consultations about civil authority coverage lawsuits are free and confidential.

What Is Civil Authority Insurance?

In New York City, the need for civil authority insurancebecame painfully apparent following the 9/11 terrorist attacks and in the wake of Super Storm Sandy. While there were many claims honored during these events, there were a number of questions that arose about the application and extent of coverage, much like what we are seeing with the novel coronavirus and the ongoing economic crisis.

Civil authority insurance is a part of a commercial property policy that kicks in when:

  • There is damage to an adjacent property or the surrounding area (usually within a mile) that prohibits access to your establishment, as decreed by civil authorities.
  • The action of civil authority is taken in response to dangerous physical conditions or to enable a civil authority to have unimpeded access to the damaged areas.

More liberal provisions may only require that a civil or military authority prohibits access to the insured’s property due to a peril, which results in loss of business income. In these cases, physical damage may not be necessary.

Policies may vary, but the coverage typically begins 72 hours after the civil authority prohibition and may continue for a maximum of four weeks. For example, during a hurricane, authorities might cordon off an entire hard-hit area, impacting businesses that may have sustained little to no damage but were nevertheless impacted by the civil authority order.

What Does Civil Authority InsuranceCover?

Civil authority insurance covers:

  • Business interruption – the actual loss of business income (as evidenced by historic bookkeeping records), including ongoing operating expenses (including payroll) and decrease in rental value.
  • Necessary extra expenses – costs directly caused by the action of the civil authority that blocked off access to the premises, which may include repairs or replacements to your own property, new machinery, testing or inspection costs, relocation to a new property, or increased maintenance expenses.

Does a New York City Shelter-In-Place Order Trigger Civil Authority Coverage?

A crucial question business owners are asking is, “Does insurance cover quarantine? Does it cover the New York City shelter in place order?” This is a question insurance companies, policyholders, law firms, and courts are debating fiercely.

  • Did civil authorities “shut down” the area? Despite New York City’s shelter-in-place order, a number of businesses were deemed essential – grocers, restaurants offering takeout or delivery, convenience stores, liquor stores, warehouses, distribution centers, gas stations, banks, veterinary providers, funeral homes, auto repair centers, child care providers, manufacturing facilities, pharmacies, and health care centers, for instance.
  • Does COVID-19 cause physical property damage? Coronaviruses can impact and contaminate surfaces, objects, and materials, and thus represent actual physical damage to property.
  • What did the New York City shelter in place order say? Mayor De Blasio’s shelter in place order (Emergency Executive Order No. 100) issued on March 16, 2020, was predicated on the fact that COVID-19 “physically is causing property loss and damage.” Language so directly mirroring insurance policy language makes it harder for insurers to deny coverage.
  • What does the law say? Proposed legislation (AB A10226) would require insurers to reimburse ailing businesses that have lost revenue related to COVID-19 closures. The bill would retroactively apply to restaurants, hotels, and other small businesses with 250 or fewer employees and insurance policies in place by March 7, 2020. Lawmakers say viruses hold the potential for physical damage and lost revenue in much the same way as fire, theft, wind, and other catastrophic events do.

Business Interruption Insurance Civil AuthorityLawsuits Are Piling Up

The number of business interruption insurance civil authority lawsuits in NYC will only continue to grow as cash-strapped businesses seek every possible avenue for financial compensation to stay afloat. Don’t be left behind when the wave of coronavirus insurance claim payouts to local NYC businesses hits! Those who are in the front of the line with their claims have the best chance of getting the biggest and most prompt payouts.

It costs nothing upfront to work with a New York City business interruption insurance lawyer at Douglas & London. Call today to schedule a free consultation with an experienced attorney who can inform you about your legal options and give you the information you need to file the strongest insurance claim possible. If the insurance company denies your claim in bad faith, we are fully prepared to take them to court on your behalf.