Is the Corona virus (COVID-19) covered under your business insurance?

Given the potential impact of COVID-19 on your business operations, we have received many calls with respect to business interruption coverage and the following should help clear this topic.

Most property policies include business interruption coverage when the business interruption is caused by a Covered Cause of Loss. A Covered Cause of Loss is defined as risks of direct physical loss unless the loss is excluded or limited. The coverage form specifically excludes damage caused directly or indirectly by any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.

Most policies also includes civil authority coverage. Coverage may be afforded when a Covered Cause of Loss causes damage to property other than property at the described premises and a civil authority prohibits access to the described premises. A Covered Cause of Loss is defined as risks of direct physical loss unless the loss is excluded or limited. The policy specifically excludes damage caused directly or indirectly by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.

Most policies also includes contingent business interruption coverage. This coverage requires damage at the premises of a dependent property caused from any Covered Cause of Loss. A Covered Cause of Loss is defined as risks of direct physical loss unless the loss is excluded or limited. The coverage form specifically excludes damage caused directly or indirectly by any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.

What does all this mean? In general, pandemics were never intended to be a covered peril and at this point in time, remain that way from what we have seen. Hopefully the industry can correct this in the future but until if and when this happens, we must all stick together. If you are unsure about your coverage, consult with your independent Insurance Agent or Broker.

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