Growing Trend: Covid-19 and Business Interruption Coverage

Some businesses have the foresight to purchase Business Interruption Coverage from their insurance carrier in the case of unforeseen events bring their revenues to a halt. The growing question: Is the Covid-19 Pandemic of 2020 covered under these polices? This is a question that will likely be litigated over the coming years- long after the immediate need for the money has gone possibly through a closure of the business. Some lawmakers are already trying to head off that litigation by making clear that the coverage applies to the current pandemic.   

Legislatures in Ohio, Massachusetts, New York and New Jersey already have had proposals in front of them to confirm that a property policies’ business interruption coverage does extend to any losses attributable to the pandemic and social distancing which has caused the interruption of business revenues.   

If passed, this will not allow the insurance companies to avoid payment of the coverage as a result of disputes over policy language and scope including the use by the insurance companies of “virus exclusions.”   

New Jersey was the first state to propose such a bill, which has not been passed in any State as of yet, which would hold harmless those business owners which anticipated the potential for business interruption as a result of an event like the coronavirus pandemic and its fallout. The bill would require that every presently in force business interruption policy insuring against loss or damage to property be construed to cover the perils associated with the “global virus transmission or pandemic”. Insurance companies would be required to honor the policy up to its limits for any lost business income for the duration of the declared State of Emergency. This bill protects any employer with less than 500 employees. In New York a similar bill protects insureds with fewer than 100 eligible employees.   

The two primary coverage defenses announced by the insurance industry to these business interruption policies include: a virus is not covered or there is not physical damage to the property of the insured. The Massachusetts’ proposal applies to small businesses with 150 or fewer employees. Ohio’s proposed law covers businesses with less than 100 employees.  

If your business has a Business Interruption rider to its property policy, it is important to review its language immediately. It will also be very important to save any and all evidence reflecting your loss of revenue and the impact of the Covid-19 pandemic to your community and the business itself.   

If you have questions about your policy or would like to have it reviewed contact the Keith Law Group at 479-335-1355. Getting out in front of this may become the difference between getting reimbursed for your small business losses. 

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