Pirates Invade Tampa! Is an Invasion Covered Under a Commercial Insurance Policy?

It was Gasparilla Day in Tampa yesterday. I wrote about this invasion by pirates last year in “Is There Coverage For Pirates? Chip Merlin and His Friends Plunder Tampa on Gasparilla Day!” where I gave a short explanation of the day:

Tampa’s Mayor refused to hand over the keys to the city on Tuesday to a small handful of pirates from ‘ye Mystic Krewe of Gasparilla.’ Today, they are coming back with friends in an invasion that will last less than a day. Many of you may be reading this blog while a little more than 600 of us are invading Tampa, forcibly making the mayor surrender keys to the city and then celebrating by marching along in the third largest parade in the United States. It is Gasparilla Day in Tampa!

Is an Invasion Covered? Read the full policy to find out.

Most standard commercial property policies require a “direct physical loss or damage” to covered property to trigger coverage. In cases where an “invasion,” such as an encroachment by trespassers or unauthorized occupants, causes physical damage, there may be potential for coverage, provided no exclusions apply. However, if the invasion does not result in tangible physical damage, coverage is unlikely, as standard policies do not cover purely economic or intangible losses unless explicitly insured under business interruption or similar endorsements.

Commercial property forms include exclusions that may specifically preclude coverage for invasions. One notable exclusion is the war and military action clause, which expressly excludes losses caused by military invasions or occupations. However, this exclusion is unlikely to apply to non-military scenarios and certainly to Gasparilla pirates. In some instances, an invasion might result in governmental restrictions on access to the property. In such cases, civil authority exclusions could limit coverage unless the policy includes specific provisions for civil authority-related losses. If the invasion involves acts of vandalism or malicious mischief, coverage could apply depending on whether vandalism is a covered peril in the policy.

However, some clever insurance nerds reading this blog may think: What about a cyber invasion? This scenario was discussed in The War Exclusion and Governmental Cyber Attack.

Additional coverages might provide some relief in invasion scenarios. For instance, if the invasion causes physical damage resulting in a suspension of operations, business interruption or extra expense coverage could potentially apply, provided the underlying loss meets the policy’s coverage requirements. Similarly, vandalism and malicious mischief coverage, if included in the policy, could address damages resulting from such acts during an invasion.

Given the complexity of policy language and the nuances of exclusions and endorsements, an invasion-related loss should be carefully reviewed by reading the full policy. It is critical to understand the causes of loss forms and any relevant endorsements that might broaden or limit coverage. Coverage disputes in these cases often hinge on legal interpretations of “direct physical loss” and how courts define “invasion” in the context of the policy language.

Ultimately, military invasions are explicitly excluded under common commercial property policies using the following type of language:

This insurance does not cover loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss:

War, including undeclared or civil war;
Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign, or other authority using military personnel or other agents;
Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.

Non-military “invasions” require a closer examination of policy terms and exclusions.

Thought For The Day

“Now and then we had a hope that if we lived and were good, God would permit us to be pirates.”
—Mark Twain