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Summary: Events have spawned increased calls for similar coverages found in two separate forms. On the one hand, the Business Income Form (see, for example, ISO’s Business Income (And Extra Expense) Coverage Form, CP 00 30 10 12, as an additional coverage, promises to pay “for the actual loss of Business Income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access…due to direct physical loss of or damage to property….” On the other hand, the homeowners forms (see ISO’s Homeowners 3 – Special Form HO 00 03 05 11 state that “If a civil authority prohibits you from use of the ‘residence premises’ as a result of direct damage to neighboring premises by a Peril Insured Against, we cover the loss… for no more than two weeks.”

The issues raised by these promises to pay include the meaning of a “civil authority,” “prohibited access,” and “neighboring.” Additionally, questions have been raised as to what constitutes “direct physical loss”—does the term include loss of function?

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