Generally, in the event of a natural disaster that results in the business needing to shut its doors, business owners are able to make a claim with their property insurance coverage for losses. With business interruption coverage, businesses are able to make a claim for lost revenue if a natural disaster results in the business needing to close down. If a crucial supplier shuts down because of a natural disaster, business interruption coverage could also kick in, reimbursing the business for lost revenue. However, many analysts claim that many of these business interruption policies won’t cover losses due to the coronavirus because these business losses stem from a virus and not from physical damage to a structure. According to the New York Times, most business interruption coverage requires that the business suffer “direct physical loss or damage” in order for a settlement to be paid. Because quarantines and coronavirus doesn’t necessarily cause physical loss or damage, most businesses that carry this coverage won’t be able to make a claim in the event of the coronavirus.
That said, if you are a small business owner and purchase business interruption coverage, now might be the time to closely read your policy or have a lawyer review the language of your policy if you are not sure what is or isn’t covered. In the aftermath of epidemics like SARS, most insurance companies took steps to change the language of their policies to explicitly not cover losses related to epidemics. But if you have an older policy that precedes these epidemics or if your insurance company failed to be specific in the language of the policy, you may be able to argue to have business interruption coverage cover your losses. Some coverage may also be broader in nature and may cover your business for interruptions related to the virus.
And even if your business interruption coverage specifically requires that your place of business suffer physical loss or damage, one article published in JD Supra notes that if you can show that your place of business was in some way physically altered by the virus, it might be possible to make a claim. For example, some courts might consider intangible physical changes, while other courts will require that a business suffer more robust visible damage before a claim can be made. JD Supra notes that while most jurisdictions will hold that a space needing to be cleaned doesn’t, in itself, warrant “physical damage,” it isn’t clear whether some jurisdictions might allow a business to claim physical damage if a business was affected by the virus and a particularly invasive or thorough cleaning was required. However, even if a policy could cover mitigation for physical damage, the mitigation required may not be costly at all. Given that most companies can mitigate exposure to the virus by regularly cleaning surfaces and given that a simple solution that includes water and vinegar can disinfect most surfaces, the costs of mitigating “physical damage” may not be prohibitive at all.
However, it should be noted, before you assume that your business or property isn’t covered for coronavirus losses, you should carefully read through your policy. Some policies may not have explicit language that states that the business must be physically damaged for business interruption coverage to take place. If this is the case, your business might be entitled to make a claim or receive benefits for losses you have sustained due to interruptions due to the coronavirus.
Additionally, the New York Times recently reported on a new type of business insurance that would cover a business’s losses during a pandemic. While this insurance won’t cover losses during a pandemic already in progress (namely, during the coronavirus pandemic), reports indicate that some companies are looking for insurance coverage to protect them from a future event.
Do you have questions about whether your business property insurance coverage might be able to cover you for interruptions to your business resulting from the coronavirus? Do you need help interpreting the endorsements or fine print of your business insurance coverage? Leader, Leader, & Zucker, PLLC is an insurance claims law firm in Fort Lauderdale, Florida that may be able to assist you.
Other Ways the Coronavirus May Impact the Insurance Claims Process
As people are being asked to quarantine and maintain social distancing, there are other ways that the coronavirus pandemic can impact the insurance industry. If companies need to shut their doors, or employees are asked to stay home, or if people start to become sick, adjusters may not be able to investigate claims in person or be able to send personnel to properly assess a claim. If you need to repair your home, contractors may not be immediately available to make these repairs. Maintaining clear documentation of your damages and losses and attempts to mitigate damages and make repairs during this tough time is important. Have questions about how the coronavirus might impact your insurance claim? Leader, Leader, & Zucker, PLLC is an insurance claims law firm in Fort Lauderdale, Florida that is here for you.