Business interruption after an administrative closure order

Administrative closure cover pays the business interruption loss of a premises that the authorities order closed, with no physical damage to it. Before 2020 it was sold as an extension to package policies for restaurants and retailers. The scenario in mind was a health closure after food poisoning, a Legionella outbreak or a murder on the premises. A French order of March 14, 2020 shut every restaurant and bar in the country at once, and a decree of March 23, 2020 extended the measure. Policyholders claimed months of losses. Many policies excluded the closure when, on the same date, another business in the same département was closed for an identical cause. France's Cour de cassation (2nd civil chamber, December 1, 2022, four rulings including no. 21-15.392) held that clause clear and limited, hence valid: the cover keeps its substance for an isolated closure. In the UK, the Supreme Court largely sided with policyholders on other wordings in the FCA test case of January 15, 2021. For the underwriter, the lesson is accumulation. Cover priced as an individual risk turns into a catastrophe once the cause is general. Wordings written since 2020 cap the cause, the duration and the amount, or exclude epidemics by name. Not to be confused with the civil authority clause, which usually requires physical damage in the vicinity.