Because of the advance warning prior to the arrival of Hurricane Sandy, low-lying areas in New York, including Lower Manhattan and the financial district—including the New York Stock Exchange, Citigroup, J.P. Morgan, and many, many more businesses—were evacuated. Other areas that were evacuated include Manhattan’s Battery Park, Brooklyn’s Coney Island and Manhattan Beach, The Rockaways in Queens, and the Staten Island shore areas.
These areas are located inside New York’s Zone A, which is the mandatory evacuation area that is prone to flooding. Zone A begins at 39th and 1st streets in Manhattan and continues down the East River through the financial district and up the West Side Highway to 60th Street.
While some businesses in Zone A were spared flood and property damage, many New York businesses in this area suffered flood damage and storm surge. Because several companies in New York couldn’t conduct business due to evacuations orders, utility outages, and transportation shutdowns, they ended up suffering business losses. Due to this, companies that lost business and have been faced with increased costs should look to their business interruption insurance coverage to help with the income losses suffered from Sandy.
Additionally, business owners who have businesses in areas that were evacuated should look to their civil authority coverage for help recovering their financial losses.
What Is Civil Authority Coverage?
It is a type of insurance coverage that many business owner property insurance policies contain. It covers lost business income due to evacuations and the inability to access office buildings when it is prohibited by an act of civil authority, the government. For instance, when Mayor Bloomberg announced a mandatory evacuation order and forced New York companies to close, civil authority coverage may apply.
Civil authority coverage may be different for each business since it depends on the specific insurance policy language; however, it typically kicks in when evacuation orders have caused companies lost income and extra expenses. This type of coverage generally only allows reimbursement for losses for a specific time period—when the government order is in place. During Hurricane Sandy, the mandatory evacuation was in place prior to the hurricane’s landfall and remained in effect after landfall.
Because all insurance policies make provisions and exclusions and each contains specific language for each specific business, small business owners should consult with a knowledgeable insurance claim attorney prior to making a commercial insurance claim. This way, they will have a better understanding of their policy and what is and isn’t covered.
If you need help understanding your policy or fighting a claim denial, call an insurance claim litigation attorney at the Voss Law Firm at 888-614-7730 today for a free consultation and a free copy of our book Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.