Loss of License Coverage
What this clause says
The Company shall indemnify the Insured for Business Income loss sustained during the Restoration Period resulting from the suspension, revocation, or conditional limitation of the Insured's license to operate, imposed by a governmental authority.
What this actually means
Loss of license coverage responds to income lost when a licensing agency suspends, revokes, or conditions the license to operate. Some forms extend to an admissions hold, which is the more common event: the facility keeps operating and keeps its cost base but cannot take new residents, so census and revenue decline while expenses do not.
What it means for an operator
An admissions hold is the regulatory sanction most likely to actually happen and it is financially brutal in a business with high fixed costs and continuous resident turnover. Census recovers slowly even after the hold lifts, because referral relationships with hospital discharge planners take time to rebuild. Standard business interruption coverage will not respond, because it requires physical damage to trigger. Two questions decide whether this coverage is worth anything: does it trigger on an admissions hold or only on full suspension or revocation, and does it exclude sanctions arising from the operator's own violations, which is the only way a license is ever actually restricted. A form excluding your own conduct covers essentially nothing.
How this evaluates
The Policy Checker applies these rules in order; the first match wins.
loss of license covered is set -> Compliant: Loss of license coverage is in place. Confirm it triggers on an admissions hold and does not exclude sanctions arising from the operator's own conduct. loss of license covered is not set -> Borderline: No loss of license coverage. An admissions hold produces a revenue decline against a fixed cost base, and ordinary business interruption will not respond because there is no physical damage.
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Common questions about this clause
- What is loss of license coverage and when does it actually pay?
- Does business interruption cover census loss after a fire?
- What insurance does a new assisted living facility need?
- What covers a generator or chiller failure at a senior living community?
- Why does ordinance or law coverage matter more for a licensed care facility?