Coronavirus: Business Interruption Loss

It is a form of property insurance that provides coverage for lost income and extra expenses during a period of interruption, typically arising from a “direct physical loss” to the insured property.

In most cases, “virus”, “disease” or “pandemic” are not named perils, unless added by an endorsement. Beware, “virus”, “disease” or “pandemic” may be defined terms, which are expressly excluded in your policy. Unless this special endorsement is listed in the policy, there is likely no coverage. Whether a COVID-19 loss will be covered by insurance will depend on the terms and conditions of the applicable policy, applied to the specific circumstances of the loss.

Your most likely sources of coverage will be found in a Commercial Property Insurance policy, General Liability Insurance policy and/or Business Interruption Insurance policy. Also, remember to check the riders and endorsements of your policies, as well.

It remains unclear whether a loss will be considered physical in the context of a global pandemic. Ultimately, each incident will depend on the policy in place, its specific wording and the facts surrounding each individual loss.

It protects against losses arising from disruptions to an insured’s supply chain. Whether such insurance will apply to losses from COVID-19 will again be dependent on the factual details of your matter.

Government action may also trigger coverage under a commercial property insurance policy. Key to the availability of this form of coverage is that there was a government order (i.e. order to close restaurants) that caused or contributed to the loss.

It is best to use a corporate or commercial lawyer in these cases. Corporate/commercial lawyers are trained to review the precise language of a contract, agreement, policy or coverage to provide their opinion on whether business interruption loss can be claimed.