ADJUSTERSINTERNATIONAL.COM 9 coverage for income loss and extra expenses, as the presence of a virus generally did not qualify as the physical loss or damage needed to trigger coverage. Even the presence of physical damage at a commercial location will not guarantee business interruption coverage. First, a qualifying loss must be due to damage by a covered peril under a commercial property policy’s cause of loss form. Then, the damaged property has to be included in the description of the insured premises. Regarding the latter, commercial tenants can find themselves without business interruption coverage in situations where their own premises are undamaged, but they cannot access those premises because of damage to service areas such as lobbies and elevators. For purposes of business interruption coverage, it is important to know whether the insured premises are limited to space occupied exclusively by the insured, or whether it extends to service areas or even an entire building or complex. Civil Authority In response to COVID-19 “lockdowns” some policyholders went to court seeking coverage under “civil authority” provisions of business interruption policies. So-called civil authority coverage pays for lost income and extra expenses incurred when a commercial insured is forced to suspend operations because public authorities have issued an order closing off access to an insured location. Very few, if any, of the pandemic-related claims were successful, however, as the coverage typically responds only if an order arises from physical loss or damage caused by a peril insured against under the claimant’s own property policy. With their locations closed and operations suspended due to the COVID-19 pandemic, commercial insureds learned they would not collect on their coverage for income loss and extra expenses, as the presence of a virus generally did not qualify as the physical loss or damage needed to trigger coverage. WHAT TO WATCH FOR Does the “order of civil authority” provision in business interruption coverage have a geographic restriction for the damage triggering the coverage?
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