The onset of the 2019-nCoV acute respiratory disease, commonly referred to as the Coronavirus, is causing significant economic hardship on regional and small businesses. As we now know, government authorities are encouraging us to all act in a socially responsible manner and stay home for the most part, with limitations being added as the days pass and as the Coronavirus inevitably progresses across the United States.
As businesses, both national, regional and local, close and sales are lost/extra business expenses increase, the question that naturally arises is whether or not any such losses or extra expenses are insured within a business interruption insurance coverage form, either a general form or a special endorsement to a business owners’ insurance policy, or through a non-traditional insurance offering/product, such as inland marine or cargo insurance.
At the onset, it is worth reiterating that any coverage analysis is based upon the specific language of the insuring agreement.
That being said, in the context of insured risk(s), it is often the case that the triggering event for any property insurance policy/insurance coverage is physical damage to the insured property or business by a named peril or an insured risk. Thus, in the context of the Coronavirus, many policies likely exclude coverage as the plain language requirement of physical damage to insured property or cargo is a requirement for triggering coverage – and a physical damage/loss has arguably not occurred. Further, it should be stated that many insurance policies have plain language exclusions for damage caused by or arising from delay, loss of market and/or contamination/communicable disease – contamination/communicable disease exclusions having been inserted into a variety of insurance policies, including ISO forms, as a result of past experiences.
Notwithstanding the foregoing, there are some policies, generally industry specific policies, which may provide insurance coverage for losses associated with the Coronavirus. For example, it is not uncommon in the hospitality, entertainment or retail industries for insurance policies to contain endorsements, with sub-limits, which expand insurance coverage to include insurance coverage for “loss of attraction”, “communicable or infectious diseases” or special perils business interruption” – insurance policy endorsements which do not necessarily require a physical loss to be triggered.
Additionally, trade disruption insurance or supply chain disruption insurance may provide coverage for loss of earnings, extra expenses and contractual penalties growing out of the Coronavirus.
To be clear, the foregoing insurance coverage endorsements/policy provisions must be analyzed on a case by case, and language/policy specific basis, to determine if the impacts of the Coronavirus constitute an insured event which can give rise to insurance coverage for such items as extra expenses associated with the Coronavirus and losses of income caused by or attributed to the Coronavirus. To reiterate, each claim will depend on the individualized wording of the insurance policy at hand – nonetheless careful documentation during periods of business disruption should be practiced by the prudent business owner.
Disclaimer:
Author: Frank E. (Trey) Simmerman, III, JD, Master of Science in Risk Management & Insurance
Simmerman Law Office, PLLC hopes you found the general information provided in this article informative. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisor. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to Simmerman Law Office, PLLC.
