June 3, 2020
In the aftermath of the killing of George Floyd in Minneapolis, protestors have taken to the streets in dozens of cities throughout the country, including New York City. While most of the protests have been peaceful, some have been plagued by violence, vandalism, arson and looting, causing extensive property damage to businesses and forcing them to shut down, at least temporarily. Compounding the problem for small business owners who were already reeling from closure orders stemming from the COVID-19 pandemic, elected officials in many states and localities have recently imposed curfews in order to quell the recent rioting, adding to the businesses’ losses. Fortunately for businesses that have property insurance, those additional losses may be covered by the business interruption provisions found in common property damage insurance policies.
Many property damage policies include business interruption provisions that cover lost business income that is caused by direct physical loss of or damage to the insured property. Under these common provisions, a business that suffers property damage due to arson or vandalism or looting should be entitled to recover not only the cost of repairing the damage to the property, but for the lost business income during the period it takes to reopen.
But what if your business loses income as a result of a governmental curfew order without suffering physical damage to your property? If your business interruption insurance policy includes “civil authority” or “ingress/egress coverage”, you may nonetheless be entitled to recover that lost business income.
A common “civil authority” provision covers actual loss of business income caused by action of civil authority that prohibits access to the insured's property due to direct physical loss of or damage to property other than that owned by the insured. Under this type of policy provision, even if your business does not suffer direct property damage, if vandalism in your area triggers a citywide curfew that causes your business to close temporarily, your business interruption insurance policy may well cover your lost business income.
Ingress/egress coverage pays for loss of business income caused by physical damage to property of others that prevents ingress/egress to an insured’s business. Under this type of provision, you could have coverage for lost business income if vandalism to property near the insured property prevents you from entering or leaving your business premises.
Whether or not your business interruption insurance policy will cover your lost business income depends on the particular language of the policy. Does it include civil authority coverage? Does it include ingress/egress coverage? Does your policy have other exclusions or limitations that affect your ability to recover? What specific language is used in your policy? For example, some policies only cover lost business income beginning 48 or 72 hours after the curfew is imposed. Was the curfew in place for less than that?
The key to determine whether you have coverage for lost business income caused by recent curfews is to review your policy closely. Experienced counsel at Moses & Singer are available to assist you in determining whether you are covered and how to best present your claim to your insurance company. Please contact me at (212) 554-7807 or email@example.com with any questions.