Our insured became involved in a legal dispute with his partner and the partner was successful in having their restaurant closed by a temporary restraining order (TRO). While the TRO was in effect, the restaurant was burglarized and cleaned out.

Does business income coverage apply while the business is closed by the TRO? If not, where is the exclusion? Does the fact that there was a burglary during the TRO change the answer to the question?

Pennsylvania Subscriber

There is no business income coverage for a business closed by a temporary restraining order. The policy insures against loss of business income only if the insured's operations are suspended due to "direct physical loss or damage to property" at the insured premises. A court's order to stop operations does not qualify as physical loss.

 The burglary constitutes physical damage and would normally trigger business income coverage. However, since it took place while operations were suspended by the TRO, there was no business to be interrupted. If the TRO were lifted before the end of the period of restoration attributable to the burglary, there would be business income coverage for the balance of that period of restoration.

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