Civil Authority provisions normally provide coverage for business income losses when access to an insured premises is prohibited by a governmental action. This coverage, however, is not easily triggered, and it will also be subject to time restrictions.

In Abner, Herrman & Brock, Inc. v. Great Northern Insurance Company, 308 F. Supp. 2d 331, 333 (S.D.N.Y. 2004), the court held that a civil authority provision of an insurance policy did not provide coverage for an insured’s alleged loss of income after access to its building was restored, even though vehicular traffic in area continued to be diverted, and the firm’s employees were confused about whether access was restored.

In Abner, the plaintiff was an investment advisory firm that offered portfolio management service to high-net-worth individuals and their families, endowments, foundations and corporate retirement plans. While the plaintiff suffered no physical damage to its property as a result of the events, access to the business premises in lower Manhattan was prohibited by civil authority through Friday, September 14, 2001, as a result of the terrorist attacks on September 11, 2001.

The plaintiff’s office was located in an area of lower Manhattan where vehicular traffic was restricted through September 17, 2001, but pedestrian access was permitted, and public transit was available as of September 14, 2001. The plaintiff alleged that the traffic restrictions made it difficult for the plaintiff’s employees to get to the premises, as well as attend meetings around the downtown area, which was plaintiff’s usual business practice. The plaintiff further alleged that the emergency traffic restrictions put a crimp in the Chairman’s ability to use his car and driver, and walking and public transportation were not palatable alternatives.

The Civil Authority provision of the policy provided:

[Great Northern] will pay for the actual business income loss you incur due to the actual impairment of your operations; and extra expense you incur due to the actual or potential impairment of your operations, when a civil authority prohibits access to your premises or a dependent business premises.

The policy also provided that:

[C]overage will begin immediately after the time the civil authority prohibits access and will end 30 consecutive days after this coverage begins; or when your business income coverage ends, whichever occurs first.

The plaintiff claimed that it was entitled to full coverage for five business days starting September 11, 2001, due to the civil prohibition from entering the premises, and to half coverage for the following twenty-five days due to the restraints the vehicular traffic. The plaintiff also claimed that the full coverage should extend for five days, instead of the four days when the civil authority actually prevented access, due to confusion by its employees over whether access to the premises was permitted.

The court did not really appreciate the Chairman’s plight and held that:

The relevant part of the Civil Authority insurance provision states that Great Northern will pay for loss “when a civil authority prohibits access to your premises.” Because access was prohibited by civil authority from September 11, 2001, through September 14, 2001, the coverage applies only to these four days. The coverage does not extend through September 17, 2001, despite any confusion that AHB employees may have had about access to the premises and despite any difficulties AHB’s Chairman or his driver may have had in getting around the city.

Notwithstanding the time restriction on the civil authority claim and despite the fact that the plaintiff’s property did not sustain any physical loss or damage, the court allowed the jury to consider whether there was a business income loss due to the inability of plaintiff’s staff to work at its premises while it was closed by the civil authority order.