As business losses caused by COVID-19 begin to mount, you should carefully review your insurance policies to determine whether you may be covered.
Are You Covered?
- Coverage for Economic Losses Due to Inability to Conduct Business Operations. Business interruption insurance, which is typically part of a commercial property insurance policy, covers economic losses resulting from a disruption in business operations. Business interruption insurance often is triggered only by physical damage to covered property. However, the law is unsettled as to whether contamination that renders property unfit for its intended use constitutes physical damage. Moreover, some business interruption insurance is triggered by communicable or infectious disease or when a government authority limits access to the insured’s property.
- Coverage for Economic Losses Due to Supply Chain Disruptions. Contingent business interruption insurance covers economic losses resulting from a disruption in the business operations of a supplier or customer. As with business interruption insurance, this insurance often is triggered only by physical damage to the supplier’s or customer’s covered property, but there may be exceptions.
- Coverage for Economic Losses Due to Events Cancellations. Event cancellation insurance covers economic losses resulting from the cancellation, postponement, or relocation of an event for reasons beyond the control of the event organizer. Some, but not all, event cancellation policies contain exclusions for infectious disease.
- Coverage for Bodily Injury Lawsuits Brought by Third Parties. Commercial general liability insurance covers defense and indemnity costs incurred in connection with lawsuits alleging, among other things, bodily injury.
How to Maximize Potential Insurance Coverage.
- Notify Your Insurers. Failure to provide timely notice to an insurer could give an insurer a basis to deny your claim. Read notice provisions in your policies carefully. Your broker can help you with providing notice.
- Mitigate Losses. If you are able to mitigate losses, you should do so, as loss mitigation is required by some insurance policies.
- Document Losses. Keep careful records of all economic losses and preserve information and documents necessary to calculate your losses.