Civil authority provisions are standard
in commercial insurance policies. If a government entity prohibits access to a
business, the insurance should cover lost income. Now, companies affected by
the pandemic are hoping that these provisions in their business interruption
(BI) policies may come to their rescue— since insurers are denying these
claims for other reasons.
Many business owners carrying BI insurance
thought their policies would include pandemic-related losses. However, many
insurance carriers denied the claim. They’ve even been told not to bother
filing. If you have not filed a claim for BI insurance, do so immediately. You
cannot pursue a lawsuit against the insurer or join a class-action lawsuit
unless your claim is filed and denied.
If your business was adversely affected due to the pandemic and you carry this insurance, a New York City business interruption insurance lawyer at Douglas & London can help. We will carefully review your policy and examine whether prohibition of access may apply in your coverage.
Prohibition of
Access
A civil authority may include a local, state, or federal government entity. The prohibition of access must prohibit access to the covered premises. In addition, the prohibition of access must be mandatory, not optional, for coverage consideration.
Civil Authority
Provisions
The wording of the civil authority provision in an insurance policy is crucial. For example, standard language may state that the insurer will pay for the actual business income loss sustained, as well as extra expenses. This must result from civil authority actions prohibiting access and due to direct damage to property. Note that this language still refers to property damage. Just because a policy contains a civil authority provision does not mean your claim is covered.
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A Copy of the
Order
To fully understand the meaning of
prohibition of access under these particular circumstances, it is necessary to
obtain a copy of the order. Again, the language used is paramount. If the order
refers to the regulation of access or impediment of it— that is not the same
as true prohibition of access. Your lawyer can discuss your options if you are
allowed to operate your business at a much-reduced scale due to a civil
authority mandate.
Property Damage
Business interruption insurance
generally only covers lost income due to property damage. Typically, this is
due to fires, hurricanes, and other natural disasters. When it comes to COVID-19,
there is no property damage per se.
Even if employees or other persons are
diagnosed with the virus, that does not mean there is any damage to the
property that cannot be mitigated with proper cleaning and sanitization. If
your property damage involved mold or other toxins that required extensive
removal and renovation, business interruption insurance should cover it. That
is not the case with coronavirus.
An Evolving
Scenario
The novel coronavirus and the
resulting shutdowns are still an evolving scenario. Legislation has been
introduced in New York and other states to require insurance companies to cover
business interruption due to the pandemic. Unsurprisingly, insurance company
lobbyists are fighting these proposed bills tooth and nail.
How these circumstances play out
remains to be seen, but your attorney should keep you abreast of any
legislative changes affecting your claim.
What We Can Do for
You
If your commercial insurance policy
includes a prohibition of access by a civil authority provision, we can review
your policy to determine whether the language may apply to pandemic-related
losses. We will also discuss whether you
may want to join a class-action lawsuit.
Contact Us at
Douglas & London for a Free Consultation
Schedule a complimentary, confidential
consultation by submitting our online form or calling or texting 24/7. Bring
your policy to the meeting for review. If you do not have a complete copy of
your policy, you can obtain one from your insurance company.
Our
dedicated attorneys work on a contingency basis, so there is no fee unless you
receive compensation. Our lawyers have recovered more than $20 billion for
clients in verdicts and settlements.
