What does my business insurance cover when it comes to the Coronavirus?

Coronavirus is causing widespread disruption in the daily lives of people across the globe, and many business owners are looking to their insurance policies to see if there is any potential reimbursement for losses that may occur due to the virus.

We produced this video to explain some of the common business insurance issues revolving around Covid-19, and while these are broad brush stroke explanations, they do answer the majority of what we believe is and is not covered.  But we do advise that any business owner contact their agent or broker for a deeper explanation of what may be covered under their specific policies.

The biggest question on the minds of business owners is:

“Will my loss of income due to the coronavirus be covered by my business interruption insurance?”

Unfortunately, I don’t think so.

The standard business income or business interruption policy form requires three things to occur for coverage to be reimbursable:

1. There needs to be direct physical damage to your premises;
2. Which is caused by a covered cause of loss or peril, such as a fire;
3. That causes you to fully or partially shut your business triggering a loss of income.

Because there has been no physical damage as cited in #1, that pretty much extinguishes access to coverage.

Now, there is a section of most policies entitled “civil authority”.  With state and local governments requiring gathering places such as bars and restaurants to be shut you may think – “Okay, maybe there’s coverage here?”  Unfortunately, the civil authority extension also requires physical damage.  In the extension, the physical damage must occur away from your premises but typically within one mile of your premises.  And that damage or civil closure is causing you to lose income.

This is commonly deployed in cities where damage to one building causes the city to shut down a few square blocks in an effort to keep people safe.  In New York City we see this when a crane falls or collapses and the mayor shuts down the surrounding area until the crane is dismantled.

Again, the loss of income your business suffers from mandated closure over Coronavirus is likely not covered.

So where is there coverage in your business policies for Coronavirus?

If you are sued, your general liability will likely respond.  But there may be certain communicable disease exclusions to deal with here.

What if a worker becomes ill from Coronavirus which they allegedly contracted at work?  Probably not covered by workers comp.  For the same reasons that if they caught a common cold and missed work.

This is a time when you should be asking questions and getting answers from your agent.  If you don’t feel you’re getting the right answers and need assistance, please contact us.  We’re here to help.  And, even if the news isn’t good, we’ll be straight about it and give you our opinion and advice.

We hope you, your family and co-workers stay safe and healthy through this challenging time, and if we can offer assistance, please don’t hesitate to contact us.