How to ensure coverage
Although standard property insurance
policies (covering fire, theft, etc.) for
business income usually have some
form of civil authority coverage included, any losses incurred in excess
of this basic coverage will fall on the
business owner. An additional civil
authority endorsement must be purchased to ensure coverage if a company
is forced out of business longer than
the three-week period covered under
the basic policy.
It is important to understand what type
of policy a business has. Some policies
will have civil authority coverage built in
and the insureds will be able to add more
if necessary, or they may have to purchase
the endorsement separately.
Civil authority coverage is sold in
blocks of time with the ultimate recovery from the insurer also limited by the
business income limits on the policy.
(Based on the earlier example, a company would increase its policy from
coverage for three weeks to as much
as three months.) In most cases, it is
possible to add civil authority (or extend the duration) by endorsement to
an existing policy, rather than having
to find a civil authority only policy. A
knowledgeable risk management and
insurance professional can provide
Civil authority coverage is often overlooked, since many do not consider instances of mass evacuations when buying
commercial property insurance. It is important to understand the impact these
events may have on a business and to prepare for them to mitigate the potential loss.
Escaping catastrophic physical damage
to a property is a good thing, but a business can still suffer monetary damages
when forced to close shop to comply with
orders from civil authorities.
Michael Brown (michaelbrown93442@
gmail.com) is vice president and
property department manager at Golden
Bear Insurance Company.
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