Considering the recent coronavirus pandemic, the most frequently asked questions our office has been getting typically relates in some way shape or form to this… “does my insurance cover my lost income due to the coronavirus?”
There are a few answers to this question but in an effort to, as my last company loved to say, “avoid the brain dump” I will give it to you simply. It is most likely not covered, but I’d recommend submitting the claim to your insurance company as they are the ones who will ultimately make the decision on coverage.
Now for the more complicated answer, let’s consider the follow areas of coverage that would most likely come into play:
1. Business Interruption Insurance is coverage for visible physical damage that results in a loss of income to your business due to a cessation in operations. The virus being in/on your structure would have to be considered visible physical damage under the policy’s definition to be eligible for coverage. Furthermore, a 72-hour deductible (waiting period) usually applies, so the virus would also have to remain present past that time period for coverage to be considered.
2. The Civil Authority section of the business interruption policy has been another area considered for coverage. The problem here is that for this coverage to come into play there must be physical damage within 1 mile of the insured property where a civil authority has restricted access causing a business cessation. The above and 72-hour deductible would also apply.
3. There is a common exclusion on property insurance policies to this effect; CP 01 40 – Exclusion of Loss Due to Virus or Bacteria. This is not typically able to be removed from the policy and would preclude any coverage in your policy related to the coronavirus.
As you can see, there is little room for coverage under the standard Business Interruption form for COVID-19. That is why the recent legislation is passed by our government is so important to business owners today – as it aims to provide the interim relief businesses need. However, as we initially stated, you should submit a claim to your insurance agent/company to get a firm decision on your specific situation as it relates it your insurance policy.
Written by Robbie Korth
If you have any questions, please feel free to contact Robbie Korth at firstname.lastname@example.org.