Pandemics and Insurance

Corona Virus and business insurance

Containing the Coronavirus
There are growing concerns about the COVID-19 coronavirus impacting businesses with travel bans, school closings and function cancellations. One question many companies are asking is if there is insurance coverage for business income or business interruption in the case of a local government-mandated shutdown to contain a community spread of the coronavirus?

The answer is in the details of typical language from either the Business Owners Policy (BOP) or Commercial Property (CP) forms your business may have:

“[Insurance company] will pay for the actual loss of Business Income you [customer] sustain due to the necessary ‘suspension’ of your ‘operations’ during the ‘period of restoration’. The ‘suspension’ must be caused by direct physical loss of or damage to property at premises which are described in the Declarations and for which a Business Income Limit of Insurance is shown in the Declarations. The loss or damage must be caused by or result from a Covered Cause of Loss. With respect to loss of or damage to personal property in the open or personal property in a vehicle, the described premises include the area within 100 feet of such premises.”

What About Civil Authority Coverage?
The action of civil authority is taken in response to dangerous physical conditions “resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property.”

Based on the language in these different insurance types and clauses, business suspension MUST BE “caused by direct physical loss of or damage to property at the described premises” or it is not covered. So, unless you have a fire or some other physical damage to a building, the impact the Corona outbreak may have on your business will not be covered by typical insurance policy clauses.

Ask Us Questions
Do you have questions about what your policy says? H&K Insurance can help because “We sell peace of mind, not a product line.”

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