Companies across the country are canceling meetings and events over travel concerns because of the coronavirus. The first question to ask is whether the company’s existing insurance policies provide coverage, in whole or in part, for any of the losses that the company sustains as a result of cancellations and disruptions.
This isn’t the first time that a health crisis has crippled the world. In 2003, for instance, the SARS outbreak caused a similar panic, and the insurance market learned its lesson by, generally, adding communicable-disease and similar exclusions to their policies in an effort to keep the risk of loss with insureds.
The types of coverages that a company likely have, and may apply, to the losses that it may experience as an immediate result of the most recent Covid-19 virus—including direct losses resulting from cancellations of meetings and events, and indirect losses resulting from restrictions impacting its suppliers, distribution networks, and partners—are as follows:
- Business Interruption Coverage: A Business Owner’s Policy typically contains coverage arising from business interruption, but it usually only applies with respect to a covered loss, such as theft or property damage. Some business interruption policies may offer coverage for loss resulting from a disease becoming notifiable, as compared to loss related to the disease itself. A review of these policy terms should be conducted.
- Events Insurance: This coverage is specifically designed to cover losses arising from a cancellation of an event under certain circumstances. The details of the triggers and limitations in this coverage, if purchased, should be evaluated.
- Travel Insurance: Such coverage often excludes losses from epidemics such as the coronavirus scare, and coverage for viral outbreaks such as Covid-19 may be available for an additional premium that must be paid in advance. Travel insurance also typically only provides coverage for unforeseen events, and Covid-19 could very well now be considered a “foreseen event.” A review of whether additional coverages were purchased, and would apply, may be in order.
- Credit Insurance: This insurance may protect a company from losses that may result from one of its business partners failing or going bankrupt as a result of the latest debacle. This is another coverage that a company should familiarize itself with if it has not purchased it already.