Civil Authority

March 20, 2020 Aaron Fessia

We’ve found ourselves in strange and uncertain times. A pandemic has spread across the world and is starting to affect everyone’s daily lives. What does that mean for your business?

Although it’s an odd time to think about it, you may have insurance coverage if your business is required to be closed under a provision in your commercial insurance policy titled “Civil Authority.”

Commercial insurance policies vary widely, and there’s likely to be a lot of fighting over these provisions, so it’s best to check the language of your insurance policy and the policies declarations before moving forward, but the most common policy language requires that there be “direct physical loss” or damage to a nearby property.

This type of coverage usually comes into play when a fire or collapse result in the police or fire department shutting down a street, but the spread of a novel virus between people to the air and surfaces in the area may well be covered under this scenario.

Scientists will have to weigh in and there is certain to be a lot of fighting in court on these issues among the lawyers, but there will be no shortage of orders from federal, state, and local governments.

As we’ve evaluated some of the orders from various state and local government entities, the language in those orders is looking favorable to recovering these types of damages from the insurance companies, and the companies are also being pressured by the government to pay some of these losses.

It has even been suggested at the federal level that these claims should be paid, and will be reimbursed by a subsequent stimulus bills, essentially making the insurers a third party administrator for the government to pay these losses.

In any event, if you’ve found yourself in this situation, have a public adjuster like VIP Adjusting review your policy to discuss whether or not you may have a viable claim. Call us or contact us for a free insurance policy review today.