Frequently Asked Questions

Does my business interruption coverage cover my income loss from mandated coronavirus shutdowns?

Most likely not. Commercial Property Policies typically pay for “direct physical loss” to covered property from a covered cause of loss. For example: a fire destroys your business premises. The insurance industry’s position is that, in this situation, a mandated shutdown is NOT a “direct physical loss”, and that virus and bacteria clean-up, if considered a loss, could be cleaned in a matter of days. That arguably is the “period of restoration”, which often occurs within the typical 72-hour deductible.

Many commercial property policies have specific exclusions for virus and bacteria-related claims. Those policies allow the industry to make a stronger position for denial of coverage.

There are lawsuits challenging those positions, but there have been no decisions on those questions yet. Also, some states are drafting laws to mandate the coverage by insurance companies. Those laws are arguably unconstitutional, as there are guarantees against government interference in lawful contracts. Such legislation if passed and imposed would likely bankrupt the insurance industry and cause a removal of private market coverage from the states that impose that obligation.

Do I have a liability exposure to coronavirus infection?

Possibly. If a worker or a customer can prove you were negligent by not closing or disinfecting your premises when you knew there was an issue and they can link their illness to that negligence. That said, the worker should be covered under a valid workers compensation policy. Many liability policies have specific exclusions for transmission of sickness from viruses and bacteria. Proving specifically how you got infected is a tall order.

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