Businesses from a wide array of industries are feeling the impact of the Coronavirus. Colorado, along with many other states, has ordered mandatory closures of restaurants, bars, gyms, and other highly-trafficked areas. Businesses are understandably looking to their insurance policies with the same question: does my policy provide coverage for business interruption associated with Coronavirus?
Whether a business has coverage always depends on the specific language of the insurance policy – but the short answer is probably not. Most business interruption coverage is included as an endorsement to a property policy. In order to trigger coverage, there needs to be “direct physical loss” to the property that is caused by a covered peril. Examples include fire, earthquake, or other physical destruction. According to insurance carriers, a government-mandated closure does not qualify as a “direct physical loss.” Additionally, many policies specifically exclude coverage for communicable diseases/infections.
While most business interruption coverage is included as an endorsement to a property insurance policy, some businesses do have a stand-alone business interruption policy that is more robust. Companies may have a better argument for coverage under one of these policies – but it will always depend on the specific language of the policy, its endorsements, and its exclusions.
If you have questions about business interruption coverage, contact your insurance broker with questions about coverage. If you need a second opinion, Moye White’s Insurance Coverage and Recovery Group is always ready to help.