The City of New Orleans issued a mandatory evacuation order because Hurricane Gustav was approaching. Brennan's, a local restaurant, was forced to close, and therefore sustained a significant business income loss. Brennan's property policy with Lexington provided limited civil authority business income coverage so it made a business income loss claim.

Lexington denied coverage because the only direct damage Gustav caused was to property located on islands in the Caribbean. Its argument was that the civil authority coverage did not apply because Brennan's was not close enough to where the actual damage occurred.

Click here to see the court's opinion of the proximity argument.

The civil authority business income coverage extension changed dramatically in the 06 07 edition of the ISO Time Element coverage forms. In order for coverage to exist, the damaged property that resulted in the civil authority action had to be located within one mile of the named insured location claiming civil authority business income or extra expense. The previous editions had no mileage limitations. The good news is that an endorsement is available to expand the territory.

Click here to review a PF&M discussion of the CP 15 32-Civil Authority Changes.

Many insureds continue to view business income as an add-on or nice-to-have coverage rather than an essential primary coverage. They may not fully understand that without this coverage they will probably not be able to continue as a viable business after a significant loss.

Click here for an easy-to-understand e-marketing article to post on your website or to mail to your clients emphasizing the importance of business income coverage.

Business income and extra expense is a coverage every property customer should purchase. The good news is that the coverage is part of every businessowners policy. The bad news is that it is only an available coverage under other coverage forms. This coverage is so important that it should be used as a prospecting tool!

Click here for a letter you would use in introducing yourself to a potential customer. Using this coverage as a lead-in will demonstrate your interest in the customer thriving after a loss.