Denial of Access Clause
The denial of access clause extends business interruption cover to loss of income caused when access to the insured's own, undamaged premises is prevented or seriously hindered by an insured event nearby.
- Clause type
- Extension
- Origin/Market
- London Market (LMA/NMA/Lloyd’s)
- Favours
- Insurer
- Negotiability
- Negotiable
Purpose
Standard business interruption cover requires physical damage at the insured’s own premises. The denial of access clause closes a practically important gap: it extends cover to situations where an insured event nearby – not at the insured’s own premises – prevents or hinders customers, staff or deliveries from reaching the undamaged site. Typical triggers include a fire at a neighbouring building, an authority-imposed cordon following an accident, or a police operation in response to a security threat.
Effect and limits
The clause’s name is somewhat misleading: most wordings do not require a complete denial of access, but are satisfied by a hindrance to, or restriction of, operations at the insured’s own premises. However, an actual insured physical damage event remains a precondition – not every regulatory order or general precaution qualifies. Coverage disputes regularly turn on the causal link between the third-party damage and the resulting order, and on the geographical radius within which damage counts as being “in the vicinity”. A waiting period, often 24 to 72 hours, filters out short-lived disruptions.
Negotiation and practice
Key negotiating points are the scope of the geographical radius, the wording of “hindrance” versus “complete prevention”, and applicable sub-limits. Businesses with high footfall at a single site (retail, hospitality, event venues) should place particular weight on a broad definition, since case law from common-law jurisdictions shows that narrowly drafted clauses are regularly construed against the insured in disputed claims.