Lerner and Rowe Business Claims

COVID-19 Business Interruption Losses Caused By Order of Civil Authority

civil authority

The COVID-19 civil authority stay-at-home orders in Nevada mandating business closures caused considerable loss to business properties and incomes. Businesses in The Silver State, and across the nation, seek to recover their losses by filing business interruption claims due to government mandates that forced them to temporarily close their doors and then significantly limit what services they could later provide. 

What Is Business Interruption Insurance? 

Business interruption insurance is either included as part of a comprehensive multi-peril commercial policy, or added to a property/casualty policy. Depending on policy exclusions, businesses may file for interruption coverage to replace income loss and operating expenses in the event a business is halted due to a direct physical loss or damage.

The high expense associated with this additional business coverage, and the recent lack of insurance company payouts, has led to an increase of coronavirus-related legal disputes between business owners and insurance companies. 

Does Business Interruption Insurance Apply to a Civil Authority Shutdown? 

For the majority of business interruption coverage claims, an insurance company requires proof that a business suffered direct physical damage. In general, civil authority mandates that require businesses to temporarily close, or that restrict full service offerings to the public would not trigger business interruption coverage. 

There are rare instances where it is possible for a commercial policyholder to have coverage for losses due to a civil authority order that did not result in physical property damage. 

How Nevada Businesses Are Fighting for Coverage    

The majority of insurance company providers for Nevada businesses argue that Gov. Steve Sisolak’s March 17 coronavirus business closure mandate of nonessential businesses, nor the April 30 stay-at-home directive, did not result in physical damages to business owners. Nevada business owners argue that the government mandate has physically affected how they do business resulting in significant losses. 

The Egg Works restaurant chain in Clark County, Nevada is owned by Brad Burdsall. His business employs 400 Las Vegas and Henderson residents and includes 150 total dine-in tables. However, when he sought business interruption coverage after the government-mandated restrictions negatively impacted his business, he was denied by his insurers for what he states are “standard business interruption expenses.” 

Mr. Burdsall’s purchased restaurant recovery insurance policies from U.S. Specialty Insurance and Tokio Marine and Acuity in September 2019 to protect “the restaurant chain against a loss of business income due to a suspension of each restaurant’s operations.”  

After the denial, the Egg Works owner filed a lawsuit (Egg and I, LLC v. U.S. Specialty Insurance Co., No. 2:20-cv-00747, D. Nev.). The lawsuit alleges that the stay-at-home restrictions only left two service options, takeout and curbside pickup, “Neither of which are practicable to meet the high standards for food quality, service, and dining experience.” Further, the forced suspension of each restaurant’s operations lead to a serious loss of business sales and other unexpected business expenses. 

Nevada Civil Authority COVID-19 Business Interruption Lawsuits

Whether you are actively pursuing a business interruption claim or have been denied coverage, the attorneys at Lerner and Rowe Business Claims, LLC offer free consultations to find out if your civil action-related business losses are covered under your current insurance policies. 

We will take a close look at the language of your commercial policy regarding property coverage and business interruption to help determine if you have a potential business interruption claim related to losses due to a civil authority mandate. 

You have nothing to lose by contacting us for a free consultation. The call is free and you will not be charged a legal fee unless we win compensation on your behalf. 

The information on this article is for general information purposes only. Nothing herein should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.