Business Interruption Coverage

Typically, whether or not there has been an order or action by civil authority and whether or not the cause of the loss is a covered peril under the policy are issues that are fairly straightforward. In fact, courts may take judicial notice of the entry of an act of civil authority, and of the covered cause of loss (such as the date a hurricane made landfall). However, substantial litigation has arisen with respect to whether and when all of the four elements are satisfied such that coverage potentially applies. For example, courts have grappled with the questions of when an order of civil authority actually prohibits access to the relevant property and whether a civil authority order results from a “covered cause of loss” that causes actual physical damage either to the insured's property, or to property within close proximity to the insured property.

Prohibition of Access

With respect to the civil authority “prohibition of access” requirement, courts have uniformly held that there is no Civil Authority coverage without an order by civil authority that prohibits access to the insured premises. Accordingly, restricted access alone is not enough. For instance, with respect to natural disasters, in the case of Kean, Miller, Hawthorne, D'Armond McCowan & Jarmon, LLP v. National Fire Ins. Co. of Hartford, No. 06-770, 2007 WL 2489711 (M.D. La. Aug. 29, 2007), the governor of Louisiana, the Louisiana State Police, and local government officials were “asking” and “encouraging” residents to stay off the streets of Baton Rouge, LA, on Aug. 29, 2005, in anticipation of Hurricane Katrina's impending landfall. The court found that under such an “order” or “advisory” there was no civil authority coverage because none of the orders actually “prohibit[ed] access” to the insured premises, but rather merely recommended or encouraged residents to remain home.

Similarly, in St. Paul Mercury Ins. Co. v. Pitt County Memorial Hospital, Inc., No. 4:01-cv-35 (E.D.N.C. June 18, 2002), a hospital sought Civil Authority coverage following Hurricane Floyd. Some of the roads to the hospital were rendered impassable by water, and others were blocked by local authorities. The court rejected the hospital's claim for coverage based on the fact that it had to reschedule elective procedures purportedly due to the restricted access. The court interpreted “denial of access” to mean “more than mere diminution of access.” Specifically, the court found that not all roads to the hospital were ordered closed by authorities nor was the entire hospital closed by civil authority order, and that therefore the Civil Authority provision of the policy simply did not apply.

Courts have reached similar conclusions with respect to the requirement that the act of civil authority must prohibit access in litigation arising out of the terrorist attacks on Sept. 11, 2001. For instance, in Abner, Herrman & Brock, Inc. v. Great Northern Ins. Co., 308 F.Supp.2d 331 (S.D.N.Y. 2004), the plaintiff, an investment advisory firm and broker dealer, claimed it suffered a business income/extra expense loss covered by its first-party property insurance policy. The plaintiff suffered no physical damage to its property as a result of the events, but access to its business premises in lower Manhattan was prohibited by civil authority through Friday, Sept. 14, 2001. Following Sept. 14, 2001, vehicular traffic was restricted, but pedestrian access was permitted, and public transit was available. The plaintiff alleged that the traffic restrictions made it difficult for the plaintiff's employees to get to the premises and attend meetings around the downtown area and that therefore the Civil Authority coverage should extend through Sept. 17, 2001, when the traffic restrictions were lifted. The court held that the language of the Civil Authority provision in the applicable policy was not ambiguous where it stated that the insurer would pay for the loss “when civil authority prohibits access to your premises.” Accordingly, the court found that because access was prohibited by civil authority from Sept. 11, 2001 through Sept. 14, 2001, the coverage applied only to these four days during which all requirements of the policy's Civil Authority provision were satisfied. Coverage did not extend through Sept. 17, 2001, despite any confusion that plaintiff's employees or clients may have had about restricted or limited access to the premises.

In another case arising out of the Sept. 11, 2001 attacks, 730 Bienville Partners, Ltd. v. Assurance Co. of America, 2002 WL 31996014 (E.D.La. 2002), the plaintiff owned and operated two hotels in New Orleans. It claimed that the Civil Authority provision in its policy with respect to business income losses applied to economic losses it suffered due to the FAA's closure of the nation's airports following the attacks. The plaintiff argued that the closure of the airports and the subsequent cancellation of flights kept many intended guests from getting to its hotels, and, therefore, the Civil Authority provision of its policy applied. The court found that a necessary component of the Civil Authority provision is that the civil authority order must directly prohibit access to the insured's premises. The court rejected the plaintiff's claim for business interruption coverage due to an order of civil authority, stating, “[w]hile the FAA's closure of the airports and cancellation of flights may have prevented many guests from getting to New Orleans and ultimately to plaintiff's hotels, the FAA hardly 'prohibited' access to the hotels.”

Courts have also strictly construed the “prohibition of access” requirement where an order of civil authority has been issued due to riots or other public disturbances. In such cases, the language of the civil authority order has often been critical. In Sloan v. Phoenix of Hartford Ins. Co., 46 Mich.App. 46, 207 N.W.2d 434 (Mich.App. 1973), the governor issued an executive order that imposed a 9:00 p.m. to 5:30 a.m. curfew and closed all places of amusement in Detroit following widespread riots. The plaintiff, who owned and operated several movie theaters in and around the city of Detroit, showed weekend matinee performances. The theaters were customarily open daily from 7:30 p.m. to midnight, but had to close pursuant to the order. None of the plaintiffs' establishments were physically damaged. The plaintiff sought to recover from its insurer the business income it lost as a result of being required to close during the curfew. The court held that because one of the perils insured against under the policy was riot and all places of amusement were closed due to order of civil authority, access to the plaintiffs' place of business was prohibited and accordingly, plaintiffs suffered a compensable loss under the terms of the policy. Notably, the policy at issue in Sloan did not require actual physical damage to the premises or adjacent premises due to a covered cause of loss in order for the civil authority coverage to apply.

In Syufy Enterprises v. Home Ins. Co. of Indiana, 1995 WL 129229 (N.D.Cal. 1995), the insured owned several movie theaters in the area affected by riots arising after the Rodney King verdict. However, in Syufy Enterprises, unlike in Sloan, the civil authority order only imposed a general dawn-to-dusk curfew and did not specifically close “places of amusement.” Accordingly, the court held that the order did not specifically prohibit any individual from entering a movie theater, or require that the insured close the theaters, and therefore, the Civil Authority coverage did not apply. See also Magee v. National Fire Ins. Co. of Hartford, No. 2007-0474, 2008 WL 426285 at 4 (La. App. 1st Cir. Feb. 8, 2008) (“once the insured 'can no longer show an “action of civil authority” that prohibits access to the described premise,' he can no longer establish all of the elements for coverage.”); Brothers, Inc. v. Liberty Mut. Fire Ins. Co., 268 A.2d 611, 613 (D.C. 1970) (court found that business fall-off due to a riot-related curfew was not recoverable as a “direct loss” to the insured property by a riot or commotion, because “direct loss” meant a loss resulting from physical damage to the property or contents).

It appears quite clear, based on existing jurisprudence, that an actual curtailment of access to the insured premises is a prerequisite to business interruption Civil Authority coverage.

Direct Physical Damage Due To a 'Covered Cause of Loss'

However, although sometimes debated, there is less jurisprudence interpreting the portion of the civil authority provision that requires direct physical damage due to a “covered cause of loss.” The first string of cases dealing with this issue once again arose out of the Sept. 11, 2001 terrorist attacks. In United Airlines, Inc. v. Insurance Co. of The State of Pa., 385 F.Supp.2d 343 (S.D.N.Y.2005), United Airlines sought business interruption coverage for loss of revenue due to the FAA's order closing all airports in the wake of the terrorist attacks. The court held that physical damage to the insured's commercial airline property, not just economic damage, was required to trigger business interruption coverage under the Civil Authority provision of United's property, terrorism, and sabotage insurance policy. The court noted that coverage for economic damages only, without damage to the insured's physical property or adjacent property, would render superfluous the Civil Authority coverage provision, under which coverage was “specifically extended to ' [a] situation when access to the insured locations is prohibited by order of civil authority as a direct result of damage to adjacent premises.” Id.

Likewise, in Paradies Shops, Inc. v. Hartford Fire Insurance Company, 2004 WL 5704715 (N.D. Ga. 2004), the plaintiff operated gift shops, newsstands, and retail stores located in airport terminals around the country. Following the Sept. 11, 2001 attacks on the World Trade Center and Pentagon, the FAA closed operations at all airports. The court held that the FAA's order, which arose out of the anticipation of further terrorist attacks, did not satisfy the direct result provision of the Policy, stating, “[the] plaintiff must be able to establish that some order of civil authority was issued as the direct result of the physical damage sustained by the World Trade Center, The Pentagon, or the field in Stony Creek Township, Pennsylvania,” and that the plaintiff failed to so demonstrate. Id.

Following the “access” decisions in the wake of the Sept. 11, 2001 terrorist attacks, courts were asked to address whether or not mandatory evacuation orders for hurricanes or other catastrophic events arise directly from a “covered cause of loss” where the evacuation order is issued prior to landfall of the hurricane, and thus prior to any actual physical loss or damage. In Assurance Co. of America v. BBB Serv. Co., Inc., 576 S.E.2d 38 (2002), the Court of Appeals of Georgia addressed this precise issue and held that to the extent the hurricane evacuation order at issue in the case was issued due to the threat of future injury to persons and property and not because of any already existing physical loss or damage to property, the plaintiff would be barred from recovery by the clear terms of the Civil Authority provision in its policy. Thus, an evacuation order issued in anticipation of hurricane damage is insufficient to satisfy the requirement that the civil authority action must be issued due to direct physical loss or damage. There is no coverage until the loss or damage actually takes place.

In the most recent case addressing the topic, Kushner LaGraize, LLC v. The Phoenix Insurance Company, 2009 WL 2922122 (E.D.La. 2009), the plaintiff claimed business interruption losses after Hurricane Gustav made landfall in Southeastern Louisiana on Sept. 1, 2008. On Aug. 31, 2008, in anticipation that Hurricane Gustav would strike in the area, Jefferson Parish Authorities issued a mandatory evacuation order for the entire parish. The evacuation order was lifted on Sept. 3, 2008, and citizens were permitted to return as of noon on that date. The plaintiff claimed that it was not able to resume operations until Monday, Sept. 8, 2008. The insurer paid for civil authority business interruption for Sept. 2 and 3, 2008 ' the period that all requirements of the Policy's Civil Authority coverage and its 24-hour time deductible were met. Not satisfied with this payment, the plaintiff claimed that it was entitled to civil authority business interruption coverage for Sept. 1, 4, and 5, 2008.

With regard to the “civil authority” coverage, the insurance contract required payment for “actual loss of Business Income [sustain[ed] and reasonable and necessary Extra Expense incur[red] caused by action of civil authority that prohibits access to the described premises” for up to three weeks. Id. The policy provided two conditions that apply to such civil authority claims. First,
“[t]he civil authority action must be due to direct physical loss of or damage to property at locations, other than [the] described premises, that are within 100 miles of the described premises, caused by or resulting from a Covered Cause of Loss.” Id. Second, such coverage only begins “24 hours after the time of that [civil authority] action and will apply for a period of three consecutive weeks after coverage begins.” Id. The court noted that the Hurricane did not make landfall until Sept. 1, 2009. Therefore, plaintiff had failed to establish any physical damage to property within 100 miles of the described premises prior to that date. Further, as the policy did not provide for coverage for the first 24 hours, plaintiff's claims for civil authority coverage for Sept. 1, 2008 were also untenable.

Finally, the court held that the plaintiff had failed to state a claim with respect to any Civil Authority coverage after Sept. 3, 2008, when the evacuation order was lifted and all the requirements for Civil Authority coverage were no longer satisfied. The court rejected outright any suggestion that the civil authority coverage should last for three weeks after the evacuation order because the contract states that coverage “will apply for a period of three consecutive weeks after coverage begins,” stating, “this definition would lead to the illogical conclusion that even a short civil authority intervention results in three weeks of guaranteed insurance payments. The court determined that the “more logical interpretation” was that civil authority coverage can last no longer than three weeks and held that the insurer had properly paid the claim based on the time that the mandatory evacuation order was in place following landfall of the hurricane. The court noted that the Civil Authority coverage under the policy was properly terminated when the act of civil authority prohibiting access ended on Wednesday, Sept. 3, 2008.

Conclusion

Courts that have addressed the issue have strictly interpreted the plain language of Civil Authority business interruption provisions in first-party commercial property insurance policies. Simply put, there is no Civil Authority coverage available unless all requirements of this coverage are satisfied. Not only must there be an action by civil authority prohibiting access, but the action of civil authority must result from direct physical loss to other property, and the direct physical loss must be caused by a Covered Cause of Loss. Only then may an insured's claim for business interruption losses due to order of civil authority be covered, and such coverage applies only while the order of civil authority is in effect.

Business Interruption coverage is contained in most first-party commercial property insurance and is meant to provide coverage where there is a suspension of business caused by direct physical loss to the property. Such policies also contain a “Civil Authority” provision, which typically states that the insurer will pay business income losses caused by the action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than the described premises, caused by or resulting from a Covered Cause of Loss. (See ISO Form CP 15 08 10 00.) The Civil Authority provision often comes into play during catastrophic events, natural disasters, and times of civil unrest.

Four Aspects to Civil Authority Provisions

There are four aspects to the standard Civil Authority provisions, and Civil Authority coverage potentially applies only when all of these elements are satisfied concurrently. Consequently, in order to trigger coverage, there must be: 1) an action by civil authority; 2) that is the result of direct physical loss to other property; 3) that “prohibits access” to the business in question, and; 4) such direct physical loss must be caused by a Covered Cause of Loss. Consequently, a policy's Civil Authority provision potentially provides coverage only while there is an order of civil authority in effect that actually prohibits access to the insured's premises, and the order prohibits access due to direct physical damage resulting from a covered cause of loss.

Typically, whether or not there has been an order or action by civil authority and whether or not the cause of the loss is a covered peril under the policy are issues that are fairly straightforward. In fact, courts may take judicial notice of the entry of an act of civil authority, and of the covered cause of loss (such as the date a hurricane made landfall). However, substantial litigation has arisen with respect to whether and when all of the four elements are satisfied such that coverage potentially applies. For example, courts have grappled with the questions of when an order of civil authority actually prohibits access to the relevant property and whether a civil authority order results from a “covered cause of loss” that causes actual physical damage either to the insured's property, or to property within close proximity to the insured property.

Prohibition of Access

With respect to the civil authority “prohibition of access” requirement, courts have uniformly held that there is no Civil Authority coverage without an order by civil authority that prohibits access to the insured premises. Accordingly, restricted access alone is not enough. For instance, with respect to natural disasters, in the case of Kean, Miller, Hawthorne, D'Armond McCowan & Jarmon, LLP v. National Fire Ins. Co. of Hartford, No. 06-770, 2007 WL 2489711 (M.D. La. Aug. 29, 2007), the governor of Louisiana, the Louisiana State Police, and local government officials were “asking” and “encouraging” residents to stay off the streets of Baton Rouge, LA, on Aug. 29, 2005, in anticipation of Hurricane Katrina's impending landfall. The court found that under such an “order” or “advisory” there was no civil authority coverage because none of the orders actually “prohibit[ed] access” to the insured premises, but rather merely recommended or encouraged residents to remain home.

Similarly, in St. Paul Mercury Ins. Co. v. Pitt County Memorial Hospital, Inc., No. 4:01-cv-35 (E.D.N.C. June 18, 2002), a hospital sought Civil Authority coverage following Hurricane Floyd. Some of the roads to the hospital were rendered impassable by water, and others were blocked by local authorities. The court rejected the hospital's claim for coverage based on the fact that it had to reschedule elective procedures purportedly due to the restricted access. The court interpreted “denial of access” to mean “more than mere diminution of access.” Specifically, the court found that not all roads to the hospital were ordered closed by authorities nor was the entire hospital closed by civil authority order, and that therefore the Civil Authority provision of the policy simply did not apply.

Courts have reached similar conclusions with respect to the requirement that the act of civil authority must prohibit access in litigation arising out of the terrorist attacks on Sept. 11, 2001. For instance, in Abner, Herrman & Brock, Inc. v. Great Northern Ins. Co. , 308 F.Supp.2d 331 (S.D.N.Y. 2004), the plaintiff, an investment advisory firm and broker dealer, claimed it suffered a business income/extra expense loss covered by its first-party property insurance policy. The plaintiff suffered no physical damage to its property as a result of the events, but access to its business premises in lower Manhattan was prohibited by civil authority through Friday, Sept. 14, 2001. Following Sept. 14, 2001, vehicular traffic was restricted, but pedestrian access was permitted, and public transit was available. The plaintiff alleged that the traffic restrictions made it difficult for the plaintiff's employees to get to the premises and attend meetings around the downtown area and that therefore the Civil Authority coverage should extend through Sept. 17, 2001, when the traffic restrictions were lifted. The court held that the language of the Civil Authority provision in the applicable policy was not ambiguous where it stated that the insurer would pay for the loss “when civil authority prohibits access to your premises.” Accordingly, the court found that because access was prohibited by civil authority from Sept. 11, 2001 through Sept. 14, 2001, the coverage applied only to these four days during which all requirements of the policy's Civil Authority provision were satisfied. Coverage did not extend through Sept. 17, 2001, despite any confusion that plaintiff's employees or clients may have had about restricted or limited access to the premises.

In another case arising out of the Sept. 11, 2001 attacks, 730 Bienville Partners, Ltd. v. Assurance Co. of America, 2002 WL 31996014 (E.D.La. 2002), the plaintiff owned and operated two hotels in New Orleans. It claimed that the Civil Authority provision in its policy with respect to business income losses applied to economic losses it suffered due to the FAA's closure of the nation's airports following the attacks. The plaintiff argued that the closure of the airports and the subsequent cancellation of flights kept many intended guests from getting to its hotels, and, therefore, the Civil Authority provision of its policy applied. The court found that a necessary component of the Civil Authority provision is that the civil authority order must directly prohibit access to the insured's premises. The court rejected the plaintiff's claim for business interruption coverage due to an order of civil authority, stating, “[w]hile the FAA's closure of the airports and cancellation of flights may have prevented many guests from getting to New Orleans and ultimately to plaintiff's hotels, the FAA hardly 'prohibited' access to the hotels.”

Courts have also strictly construed the “prohibition of access” requirement where an order of civil authority has been issued due to riots or other public disturbances. In such cases, the language of the civil authority order has often been critical. In Sloan v. Phoenix of Hartford Ins. Co. , 46 Mich.App. 46, 207 N.W.2d 434 (Mich.App. 1973), the governor issued an executive order that imposed a 9:00 p.m. to 5:30 a.m. curfew and closed all places of amusement in Detroit following widespread riots. The plaintiff, who owned and operated several movie theaters in and around the city of Detroit, showed weekend matinee performances. The theaters were customarily open daily from 7:30 p.m. to midnight, but had to close pursuant to the order. None of the plaintiffs' establishments were physically damaged. The plaintiff sought to recover from its insurer the business income it lost as a result of being required to close during the curfew. The court held that because one of the perils insured against under the policy was riot and all places of amusement were closed due to order of civil authority, access to the plaintiffs' place of business was prohibited and accordingly, plaintiffs suffered a compensable loss under the terms of the policy. Notably, the policy at issue in Sloan did not require actual physical damage to the premises or adjacent premises due to a covered cause of loss in order for the civil authority coverage to apply.

In Syufy Enterprises v. Home Ins. Co. of Indiana, 1995 WL 129229 (N.D.Cal. 1995), the insured owned several movie theaters in the area affected by riots arising after the Rodney King verdict. However, in Syufy Enterprises, unlike in Sloan, the civil authority order only imposed a general dawn-to-dusk curfew and did not specifically close “places of amusement.” Accordingly, the court held that the order did not specifically prohibit any individual from entering a movie theater, or require that the insured close the theaters, and therefore, the Civil Authority coverage did not apply. See also Magee v. National Fire Ins. Co. of Hartford, No. 2007-0474, 2008 WL 426285 at 4 (La. App. 1st Cir. Feb. 8, 2008) (“once the insured 'can no longer show an “action of civil authority” that prohibits access to the described premise,' he can no longer establish all of the elements for coverage.”); Brothers, Inc. v. Liberty Mut. Fire Ins. Co. , 268 A.2d 611, 613 (D.C. 1970) (court found that business fall-off due to a riot-related curfew was not recoverable as a “direct loss” to the insured property by a riot or commotion, because “direct loss” meant a loss resulting from physical damage to the property or contents).

It appears quite clear, based on existing jurisprudence, that an actual curtailment of access to the insured premises is a prerequisite to business interruption Civil Authority coverage.

Direct Physical Damage Due To a 'Covered Cause of Loss'

However, although sometimes debated, there is less jurisprudence interpreting the portion of the civil authority provision that requires direct physical damage due to a “covered cause of loss.” The first string of cases dealing with this issue once again arose out of the Sept. 11, 2001 terrorist attacks. In United Airlines, Inc. v. Insurance Co. of The State of Pa. , 385 F.Supp.2d 343 (S.D.N.Y.2005), United Airlines sought business interruption coverage for loss of revenue due to the FAA's order closing all airports in the wake of the terrorist attacks. The court held that physical damage to the insured's commercial airline property, not just economic damage, was required to trigger business interruption coverage under the Civil Authority provision of United's property, terrorism, and sabotage insurance policy. The court noted that coverage for economic damages only, without damage to the insured's physical property or adjacent property, would render superfluous the Civil Authority coverage provision, under which coverage was “specifically extended to ' [a] situation when access to the insured locations is prohibited by order of civil authority as a direct result of damage to adjacent premises.” Id.

Likewise, in Paradies Shops, Inc. v. Hartford Fire Insurance Company, 2004 WL 5704715 (N.D. Ga. 2004), the plaintiff operated gift shops, newsstands, and retail stores located in airport terminals around the country. Following the Sept. 11, 2001 attacks on the World Trade Center and Pentagon, the FAA closed operations at all airports. The court held that the FAA's order, which arose out of the anticipation of further terrorist attacks, did not satisfy the direct result provision of the Policy, stating, “[the] plaintiff must be able to establish that some order of civil authority was issued as the direct result of the physical damage sustained by the World Trade Center, The Pentagon, or the field in Stony Creek Township, Pennsylvania,” and that the plaintiff failed to so demonstrate. Id.

Following the “access” decisions in the wake of the Sept. 11, 2001 terrorist attacks, courts were asked to address whether or not mandatory evacuation orders for hurricanes or other catastrophic events arise directly from a “covered cause of loss” where the evacuation order is issued prior to landfall of the hurricane, and thus prior to any actual physical loss or damage. In Assurance Co. of America v. BBB Serv. Co., Inc. , 576 S.E.2d 38 (2002), the Court of Appeals of Georgia addressed this precise issue and held that to the extent the hurricane evacuation order at issue in the case was issued due to the threat of future injury to persons and property and not because of any already existing physical loss or damage to property, the plaintiff would be barred from recovery by the clear terms of the Civil Authority provision in its policy. Thus, an evacuation order issued in anticipation of hurricane damage is insufficient to satisfy the requirement that the civil authority action must be issued due to direct physical loss or damage. There is no coverage until the loss or damage actually takes place.

In the most recent case addressing the topic, Kushner LaGraize, LLC v. The Phoenix Insurance Company, 2009 WL 2922122 (E.D.La. 2009), the plaintiff claimed business interruption losses after Hurricane Gustav made landfall in Southeastern Louisiana on Sept. 1, 2008. On Aug. 31, 2008, in anticipation that Hurricane Gustav would strike in the area, Jefferson Parish Authorities issued a mandatory evacuation order for the entire parish. The evacuation order was lifted on Sept. 3, 2008, and citizens were permitted to return as of noon on that date. The plaintiff claimed that it was not able to resume operations until Monday, Sept. 8, 2008. The insurer paid for civil authority business interruption for Sept. 2 and 3, 2008 ' the period that all requirements of the Policy's Civil Authority coverage and its 24-hour time deductible were met. Not satisfied with this payment, the plaintiff claimed that it was entitled to civil authority business interruption coverage for Sept. 1, 4, and 5, 2008.

With regard to the “civil authority” coverage, the insurance contract required payment for “actual loss of Business Income [sustain[ed] and reasonable and necessary Extra Expense incur[red] caused by action of civil authority that prohibits access to the described premises” for up to three weeks. Id. The policy provided two conditions that apply to such civil authority claims. First,
“[t]he civil authority action must be due to direct physical loss of or damage to property at locations, other than [the] described premises, that are within 100 miles of the described premises, caused by or resulting from a Covered Cause of Loss.” Id. Second, such coverage only begins “24 hours after the time of that [civil authority] action and will apply for a period of three consecutive weeks after coverage begins.” Id. The court noted that the Hurricane did not make landfall until Sept. 1, 2009. Therefore, plaintiff had failed to establish any physical damage to property within 100 miles of the described premises prior to that date. Further, as the policy did not provide for coverage for the first 24 hours, plaintiff's claims for civil authority coverage for Sept. 1, 2008 were also untenable.

Finally, the court held that the plaintiff had failed to state a claim with respect to any Civil Authority coverage after Sept. 3, 2008, when the evacuation order was lifted and all the requirements for Civil Authority coverage were no longer satisfied. The court rejected outright any suggestion that the civil authority coverage should last for three weeks after the evacuation order because the contract states that coverage “will apply for a period of three consecutive weeks after coverage begins,” stating, “this definition would lead to the illogical conclusion that even a short civil authority intervention results in three weeks of guaranteed insurance payments. The court determined that the “more logical interpretation” was that civil authority coverage can last no longer than three weeks and held that the insurer had properly paid the claim based on the time that the mandatory evacuation order was in place following landfall of the hurricane. The court noted that the Civil Authority coverage under the policy was properly terminated when the act of civil authority prohibiting access ended on Wednesday, Sept. 3, 2008.

Conclusion

Courts that have addressed the issue have strictly interpreted the plain language of Civil Authority business interruption provisions in first-party commercial property insurance policies. Simply put, there is no Civil Authority coverage available unless all requirements of this coverage are satisfied. Not only must there be an action by civil authority prohibiting access, but the action of civil authority must result from direct physical loss to other property, and the direct physical loss must be caused by a Covered Cause of Loss. Only then may an insured's claim for business interruption losses due to order of civil authority be covered, and such coverage applies only while the order of civil authority is in effect.