Coronavirus & business interruption insurance

Does your business insurance cover losses or closure because of Coronavirus?

You followed best practice and purchased insurance in the event your business was stopped unexpectedly. But, according to the fine print in most insurance policies, if your business is forced to close due to Coronavirus, there may not be business interruption coverage.

Generally, most business interruption policies contain wording that requires physical damage to the business or its property in order to engage insurance coverage. Chances are that the policy will not specifically outline health outbreaks as an insured peril or covered loss. As a result, a business may have to show that the contamination to its business caused some sort of physical damage to the property or equipment.

Many commercial insurance policies will also contain wording in the event of a forced closure or shut down by government authorities. In the event that the such measures are taken by civil authorities there could be some coverages available, however, often these coverages are limited to much shorter periods of time.

It is important for business owners to review their insurance coverage and discuss with their brokers whether such coverage is available for future events and whether it is worth the premium cost. Insurance companies learned valuable lessons from SARS in 2003, Ebola in 2014 and Zika in 2015 and will often exclude coverages that are difficulty to value.

Companies will need to ensure they take proper precautions to avoid possible shutdowns and minimize the effect of any exposures to Covid-19. Some considerations include prevention, education and decontamination measures. Employers will also need to consider their liability exposure in the event an employee exposes other staff or customers to the virus.

If lessons from SARS is a predictor of future claims, we can expect legal cases by individuals who have contracted the Coronavirus as a result of workplace negligence or as a result of exposure by those that fail to take appropriate care and precautions. However, claims against government authorities are often fraught with more difficulties.

In order to help their clients who have suffered losses from Coronavirus, lawyers will have to think creatively and strategically in order to access insurance coverage and make compensation claims.