All Risks vs. Covered Perils
Commercial property / business income insurance comes in two types, covered perils and all risk policies. Covered peril policies only provide coverage for specified risks. All risk policies provide coverage for any risk not excluded.
Commercial property / business income insurance policies commonly include coverage triggered by the action of a civil authority that prohibits access to an insured’s premises. If your business has been closed due to the various civil authority orders issued by state and local authorities in response to the Covid-19 pandemic, this civil authority coverage may have been triggered. However, if you reviewed your all risk policy and either the policy does not appear to include a civil authority provision or the civil authority provision seems triggered by the closure of a third party’s business, and not your own, you may have overlooked the coverage elsewhere.
All risks means exactly how it sounds—all risks not excluded. A government action that closes your business is a covered risk unless excluded. Sometimes, all risk policies exclude government actions of certain types. Sometimes they do not. Sometimes the exclusions are worded to cover certain types of government actions (such as condemnation) but not others. If your all risk policy does not have a government action exclusion or any government action exclusion is narrowly tailored to preclude certain actions (such as condemnation) but not others, your business may have coverage. In fact, even if you have limited coverage under a civil authority provision, you may have broader coverage under your policy’s all risk insuring agreement.
Not sure? Contact an insurance coverage professional—such as The Law Offices of Orin H. Lewis, PLLC—and we’ll be pleased to check that for you. Don’t wait to see how badly recent developments will impact you. By then, it may be too late.