IF MY BUSINESS HAS BEEN HARMED BY THE COVID-19/CORONA VIRUS SHUTDOWN, WHAT INSURANCE BENEFITS MAY BE AVAILABLE TO ME?
Businesses throughout the United States, including in Texas, Louisiana, and California, have suffered serious financial losses and business interruption caused by the orders of local, state, and federal government authorities requiring business to close or limit operations during the COVID-19/coronavirus pandemic. The direct impact has been felt by the restaurant, hotel, entertainment, vacation, and tourism industries, but no industry has been left untouched by the pandemic. For example, doctors, physicians, dentists, chiropractors, physical therapists, and optometrists have also had their businesses interrupted by stay-at-home orders.
What is business interruption insurance?
The purpose of this coverage is to protect businesses from lost revenue, financial losses, lost profit, and overhead expenses as the result of a disaster or emergency. It can go by many names, including business interruption insurance, time element insurance, or be included within a larger standard property policy, commercial property policy, or business owner policy. The most common “trigger” for this type of coverage is when an insured property sustains a direct physical loss from a disaster. Your policy should list the types of events it covers and those it excludes. The only way to determine whether an event is covered is to read the policy, and preferably to have it analyzed an attorney with experience in insurance coverage.
Is my business covered for interruptions due to COVID-19/coronavirus?
You should read your policy and contact a lawyer to determine whether there is a business interruption coverage exclusion for viruses, such as COVID-19/coronavirus. Some policies exclude business interruption coverage for viruses; however, they include other types of coverage for losses caused by a civil authority or governmental order. Each claim for business interruption coverage is unique to the specific underlying facts and policy language and should be carefully analyzed.
Does the Governor declaring a State of Emergency or a county or state official issuing a stay at home order affect my business interruption coverage?
Yes. While a state of emergency or a quarantine or stay at home order does not guarantee that there is business interruption coverage, it is part of the overall analysis of the terms of an insurance policy provide coverage.
What types of insurance may cover harm to my business caused by COVID-19/coronavirus?
When evaluating coverage for any harm related to COVID-19/Corona, it is particularly important to evaluate the terms of the policies. Coverage for these losses is likely to vary significantly from policy to policy, even if the type of insurance is the same. Some of the potential areas of coverage for business related to the COVID-19/Corona pandemic, include the following:
- Business Interruption Insurance may cover losses a business suffers to its net income after a disaster, like the COVID-19/Corona pandemic.
- Civil Authority Insurance – a special category of business interruption coverage – may protect a business from income loss when a civil/governmental authority limits or precludes access to the insureds’ property/business. Importantly, this type of insurance likely does not require any type of physical harm to the property, and may only require a business loss.
- Contingent business interruption – a supplement to business interruption coverage – may protect a businesses’ losses caused by interruption of services from vendors, contractors, or customers.
- Trade Disruption Insurance protects a business for lost income, penalties, and earnings caused by delays or disruptions in trade and global supply chains.
- Event Cancellation Insurance may provide coverage for revenue loss or expenses related to a cancelled, postponed, or relocated event due to a disaster, like the COVID-19/Corona pandemic.
- Disability Business Overhead Coverage provides coverage for business losses suffered when a policy holder suffers a disabling illness. In particular, this would apply where the insured is exposed to COVID-19, and due to the virus, the insured sustains business losses.
- Life Insurance provides coverage for family members in the tragic and unfortunate case of death caused by COVID-19/Corona.