If you haven’t checked your insurance policies, now might be a good time to do so. After all, plenty of business owners are suffering today with shelter-in-place and shutdown orders imposed across the country.
And when you check your coverage? Don’t be surprised if someone tells you don’t have coverage for COVID-19.
The problem? Most policies, including business interruption insurance, might not cover losses from a pandemic or virus.
“Most businesses have all-risk policies with additional coverage for business income loss and civil authority,” said Shannon Loyd, owner of San Antonio, Texas-based The Loyd Law Firm. “Both coverages are typically triggered by physical loss. However, physical loss is usually not defined in the policy, leaving a broad definition for coverage.”
This leaves many business owners unsure of what their policy does cover during this time of uncertainty.
Property owners may also have a property and casualty policy that covers their building in the event of a physical loss. This leads to plenty of questions about whether a pandemic or virus resulting in business shutdowns constitutes a physical loss. Some, though , are making the case that government shutdowns may constitute that type of loss depending on how the policy is written and interpreted in their jurisdiction.
This might leave the door open for coverage under COVID-19. However, “the virus exclusion that may exist in any all-risk policy would not apply, arguably, unless the virus was actually present at the property,” said Loyd.
As you can see, it’s about as clear as mud. And expect things to get even muddier as business owners file lawsuits and governments try to enact legislation designed to force insurance companies to make payouts relating to COVID-19 losses. Will any of these legislative efforts get passed? That’s unclear, too.
Bottom line is, look at your various insurance contracts, talk to your agent and then consider reaching out to get an analysis from an attorney like Loyd.
Kelsey Ancelot leads the media and event online sales and marketing efforts at REjournals. You can reach her at [email protected].