Coronavirus and Business Insurance

We have begun to receive numerous calls from clients inquiring about coverage for lost income due to their business being negatively impacted by our current pandemic.  As with any coverage question, we must note that the insurance company, and/or the courts, always have the final say on what is and isn’t covered in any given policy (and policies do vary). But, in very generalized terms, this is how most policy language reads. 

The Business Income coverage in commercial policies is triggered by direct physical damage to the covered property. In other words, before any payments are made for loss of business income under a commercial insurance policy, there must have been damage done to the building.  If the loss of business income is simply because patrons are not going out, then the coverage has not been triggered.   The same goes if civil authority requires a business to shut down (there still must be damage to the building), or a supplier can no longer provide goods (the dependent property must have been damaged). 

There is some precedent for damage to be considered to have happened if the coronavirus were actually present in the building, as noted in:

• https://www.coverageopinions.info/Vol9Issue2/ISOExcludedCoverage.html
• https://www.propertyinsurancecoveragelaw.com/2020/03/articles/insurance/crash-business-income-loss-with-no-insurance-coverage/

But as the Randy Maniloff article notes, there are also contradicting court cases as well.  And as both articles state, most commercial policies also include a “virus exclusion”, which makes coverage even more unlikely. 

We have also fielded some questions on whether or not Workers Compensation will pay if an employee gets sick on the job.  Again, this is ultimately determined by the insurance company and/or the courts, but most likely the answer to this is also there is no coverage.  

For Workers Compensation to apply not only would the illness have to have arisen from the job and was in the course and scope of employment, but it also must have been caused by conditions peculiar to the work.  So perhaps coverage could apply to someone working in the healthcare field treating the infected daily.  But for most of us, this qualification is not going to be met. 

If you should have any other questions about how insurance might respond to the coronavirus, please feel free to contact us.

For further information on the coronavirus and ways to protect yourself and those around you, visit www.cdc.gov.