In the wake of a major disaster like a hurricane, government entities often close an area to conduct inspections and provide emergency services. This type of closure can prevent access to a company’s offices, manufacturing facility, or other commercial locations. Fortunately, businesses typically have coverage to compensate for expenses and lost business income incurred because of disruption of business operations resulting from government denial of egress/ingress or an evacuation. This blog post provides a primer on this type of commercial coverage, which is referred to as “Civil Authority Coverage”.
Generally, civil authority coverage begins 72 hours after the government action that prevents access to the business premises. The coverage will continue for up to a four week period. Coverage for related costs will commence immediately after the ordered evacuation or denial of access and last for up to four weeks. However, civil authority coverage will only be triggered if all of the following requirements are satisfied:
- The waiting period expires which amounts to a deductible based on the passage of time.
- A government entity sufficiently denies access to the business premises.
- The denial of access stems from physical loss or damage caused to property within a mile radius of the insured’s business property.
The best way to understand how civil authority coverage works is to review a court case dealing with this issue. In Walker, Waechter, Poitevent, Carrere Denegre, PPP. v. Chubb Corp., a law firm was forced to temporarily close its doors in response to an evacuation ordered by the mayor in anticipation of an approaching hurricane. The mayor justified the immediate and mandatory evacuation order based on expected severe flooding, high tides, and hurricane force winds. The evacuation required the attorneys to close the law firm for four days. The insured business filed a claim for lost business income which was denied by the insurer based on the contention that all of the required elements of the Civil Authority provision had not been satisfied.
The appellate court sided with the insurer based on two separate timing issues. First, the court reasoned that the period of August 31 to September 1 was not covered because no damage had yet occurred to property within a mile radius. The firm’s Civil Authority coverage was triggered on September 2 when the hurricane made landfall. However, the claim was not covered because the waiting period was not satisfied until 72 hours had elapsed from the time physical loss or damage occurred. Since the law firm had reopened by September 4, no damage was caused to property within a mile that fell outside the 72 hour waiting period.
If your insurance carrier is refusing to comply with its contractual obligation, you are invited to contact our law firm to speak to an experienced Miami insurance claims attorney. My law firm specializes in representing policyholders in claims disputes in Miami and throughout Florida. Click here to read about some of our case results. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.