Does My Business Interruption Insurance Cover the Coronavirus?
Companies large and small are feeling the effects of the coronavirus (COVID-19) pandemic as it disrupts business operation and disturbs everyday life. Surely the current day disaster will not only have an economic impact felt by millions world-wide but will also leave a lasting legacy on the pages of history books for centuries to come.
As lawmakers finalize relief bills to stimulate a staggering economy, many business owners have looked for answers to avoid laying off employees as government mandated shutdowns have swept the nation. The common questions that has resonated with our clients: Does my insurance cover the coronavirus?
Business Owners looking for relief from the forced closing and loss of revenue have been hoping that their property coverage will support such a claim. While many property policies do reimburse for loss of business income due to business interruption, it is important to remember that coverage must be triggered by a covered event. All policies are different, and it is key to analyze each specific policy because the claims response is fact specific, meaning that the response depends on the details of each situation. However, generally coverage on a business income policy is usually triggered by direct damage to property at the listed location from a covered peril and resulting in a suspension of operations that results in the loss of business income.
The issue for claiming lost income against the business interruption coverage of many business owners is the lack of a direct physical loss to the property. Several claims have been filed for business income citing the “civil authority” coverage (government mandated business closure) as local and state governments order the closing of restaurants, bars, theaters, and fitness centers. However, we are seeing many of these claims denied by the carrier because there is no “direct physical loss to the described location” in order to trigger that coverage, and policy language is usually very specific in this regard.
A fire at a restaurant that causes the business to shut down for a few months is a good example of a direct loss that would, in most cases, trigger coverage. That begs the question of whether the COVID-19 virus inside a building would be considered “direct damage”. This question continues to be litigated and according to publications, court cases seem to be split on the issue.
Not only is the “direct physical loss” clause restricting coverage for COVID-19, many policies also contain a contamination exclusion which includes virus, disease or illness causing agents within the definition of contaminant. However, if there is coverage, it is most likely on a policy for hospitality or retail under “Loss of Attraction,” “Communicable Diseases” or “Special Perils Business Interruption.” These extensions are generally applicable to extra expenses, are sub-limited and usually do not extend to loss of income. Coverage is further restricted to the length of time to repair or replace as well as any extended period of indemnity.
There is clearly no short answer on whether insurance covers loss on income for the COVID-19 coronavirus. The best advice is to consult your Moore Resources Insurance agent to discuss the specifics of your insurance policy. While the likelihood of coverage is remote, our agents are happy to assist with filing a claim for our clients who have suffered a direct loss.
Moore Resources is an Independent Insurance Agency located in St. Petersburg, FL and offering Homeowners Insurance, Auto Insurance, Personal Insurance and Business Insurance. Our reach extends beyond the Tampa Bay area to the entire state of Florida. Moore Resources has regionally been dedicated to serving the local residents of Pinellas, Hillsborough, Polk, Pasco, Manatee and Sarasota counties; including St. Pete, Tampa, Clearwater, Bradenton, Brandon, Dunedin, Gulfport, Lakeland, Largo, Lutz, Palm Harbor, Pinellas Park, Riverview, Ruskin, Seffner, Seminole, Temple Terrace, Tierra Verde, Town n Country, and the Gulf Coast Beaches.
The purpose of this blog is to present general information only. It does not interpret specific policies or coverage. In order to obtain detailed information regarding your insurance, contact a licensed insurance agent.