Business Interruption Insurance

By: Jim Csontos, partner with Jennings Haug Cunningham

Some state and local governmental agencies have ordered restaurants, bars, health clubs, convention and conference centers and many other businesses where large groups of people gather to close. These businesses will suffer a loss of income and this loss of income may then impact the business’ lenders and landlords. An available source of funds to solve this problem is business interruption insurance.

Many insurance policies include a business interruption clause and most policies containing a business interruption clause will cover business closures when ordered by a “Civil Authority.” When a state or city issues an order prohibiting access to a business, coverage may be triggered under this provision.

Coverage for business interruptions caused by an order of a Civil Authority will vary from policy to policy, and insurer to insurer. Some clauses are narrow and cover a Civil Authority’s order only if that order is issued as a result of physical damage to a neighboring property. Other “Civil Authority” clauses are broader and cover all denials of access caused by order of a governmental agency, but often only if there is a total denial of access. If access to the business owner is permitted, but access by its customers is denied by order of the Civil Authority, a business interruption claim may be covered by the insurer. An insured must pay close attention to the terms of the policy, the conditions of the Civil Authority’s order and the wording of the claim when submitting a claim to an insurer to seek coverage for loss caused by business interruption.

The attorneys at Jennings, Haug & Cunningham, LLP are available to answer your questions about business interruption coverage under your insurance policies or provide information to other legal questions your business may have. Please contact Jim Csontos at 602-234-7832 or visit our website at www.JHC.Law.