Our insured is a business insured under the ISO standard businessowners special property coverage form (BP 00 02 12 99). We are dealing with Coverage A, Section 5.f., Business Income.

Next to our insured is a gasoline station. The tanks of the gas station leaked, and gasoline fumes entered our insured's building, causing his business to close down for several days due to the odor. There was no direct physical loss or damage to the building.

Are we correct in denying this claim?\

Pennsylvania Subscriber

This business income loss is not covered, and was correctly denied. This is because coverage under the business income form is triggered by a suspension of operations "caused by direct physical loss of or damage to property … at premises which are described in the Declarations."

Inasmuch as there was no direct loss at the insured's premises, coverage is not triggered. Fumes, in and of themselves, are not "direct damage" to the insured's premises.

There is coverage for off-premises occurrences when the suspension is caused by action of civil authorities (police, fire, etc.), if such an act by civil authorities prohibits access to insured premises, and such access is prohibited due to direct physical loss or damage to property other than at described premises, then coverage is triggered.

For example, if a covered cause of loss occurred to the neighbor's gas tanks, and the authorities mandated a closing of the insured's business, then coverage would be afforded. For instance, if an explosion in the neighbor's gas tanks caused the authorities to close the adjacent businesses, coverage would be available beginning 72 hours after the event and for a period of three weeks.