The insured's claim for Business Interruption coverage failed to survive a motion to dismiss in Kushner Lagraize, LLC v. Phoenix Ins. Co., 2009 U.S. Dist. LEXIS 81576 (E. D. La. Sept. 9, 2009).
The policy provided "property, liability, business income and extra expenses coverages" at the insured's business location. The policy further stated coverage would begin twenty-four hours after damage occurred within 100 miles of the premises that was subject to the evacuation order. On August 31, 2008, the county issued a mandatory evacuation order before Hurricane Gustav made landfall on September 1, 2008. The evacuation order was lifted September 3, 2008. The insured alleged it was unable to resume business operations until September 8, 2008.
The insured charged that Phoenix refused to pay adequate business interruption expenses and loss of business income under the "Civil Authority" provisions of the policy. Although Phoenix paid for civil authority business interruption for September 2 and 3, the insured argued it was entitled to payments for September 1, and September 4 and 5, 2008.
Hurricane Gustav made landfall on September 1, 2008. Therefore, the insured's claim for coverage on or prior to September 1 failed because the policy was not effective until after twenty-four hours after the hurricane struck. The insured also claimed that civil authority coverage should last for three weeks after the evacuation order because the policy stated coverage "will apply for a period of three consecutive weeks after coverage begins." The court disagreed with this interpretation. A more logical interpretation was that civil authority coverage could last no longer than three weeks.
