Don't Let Civil Authority Cripple your Business!
Civil Authority Defined
From the insurance carrier’s perspective Civil Authority is an insurance policy provision that determines how the loss of business income coverage applies when a government entity restricts access to the insured premises. Civil authority affects the income of all businesses, including contractors, caterers, theaters, retail store and everything in between since the businesses are ordered to close.
Civil Authority Insurance Coverage
To minimize the risk of impact on revenue loss due to Civil Authority implementation, insurance companies offer Civil Authority Coverage as part of Additional Coverages within typical business income and extra expense coverage forms. The forms are contained within business owner property (BOP) insurance policies and commercial policies (CP). This coverage contains provisions and exclusions that policyholders should be aware of when reviewing their specific policy.
If the Civil Authority Coverage is exercised, then the policy will provide coverage for lost business income due to civil authority. Although provisions vary per policy, typically:
- Length of time limit for Business Income coverage: usually limited to only 2 to 4 consecutive weeks after the loss occurs
- Deductible in the form of a waiting period: typically ranges between the first 24 and 72 hours following the loss