It allows the insured to recover the amount expended in mitigation to the extent the business income loss is reduced. The additional coverage for civil authority applies to situations where the insured's operations are suspended as a result of the act of civil authority, due to direct physical loss of or damage to property other than at the insured premises. The physical damage must be the result of a cause of loss which is covered under the insured's policy. Coverage does not apply where the insured is denied access to his premises by act of civil authority which is in response to damage at the insured premises. For example, if a building neighboring the insured's suffers a fire and the police evacuate the surrounding area, causing the insured to suspend operations, the insured would be covered for his loss of business income.
Coverage is limited to a period of no more than two consecutive weeks from the date of the action.
If, however, the insured's building suffered a fire, which prompted the civil authority to act, the insured would look for coverage under the peril of fire and not the additional coverage for civil authority. Note that if the policy does not include coverage for extra expense, as with the deductible period applicable to loss of business income resulting from a covered peril, there is a 72 hour deductible or waiting period under this coverage. The insured must be denied access for more than three days before coverage applies, but the full two week coverage period is available, running from the date the 72 hour period ends. For an insured whose physical plant is expanding, the additional coverage for alterations and new buildings could be a blessing. The new construction and alterations have to be on the described premises.