Business Interruption Claim and Mandatory Evacuation of Premises

The insureds brought a lawsuit against the insurer following its denial of coverage for losses incurred when the insured was unable to conduct business during a mandatory evacuation. This case is Dickie Brennan & Company v. Lexington Insurance Company, 636 F.3d 683 (2011).

 As Hurricane Gustav approached Louisiana in 2008, the mayor of New Orleans issued a mandatory evacuation order. This was based on the government’s anticipation of high lake and marsh tides due to a tidal surge combined with the possibility of intense thunderstorms, hurricane force winds, and widespread severe flooding. The Brennans operated New Orleans restaurants that were insured by Lexington during the evacuation. The policy provided coverage for “the actual loss of business income you sustain and necessary extra expense caused by action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than at the described premises, caused by any covered cause of loss”.