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Will My Business Interruption Insurance Cover Me During the Coronavirus Pandemic?

What is Business Interruption Insurance?

In very uncertain times such as these in a worldwide pandemic, many businesses are finding operations suddenly halted by supply chain disruption, forced closure, and reduced income. This may have many of you scrambling to apply for Small Business Loans, your employees for unemployment for reduced hours, as well as checking in with your insurance policies. 

There are a lot of questions coming up surrounding business interruption insurance. Business interruption insurance is sold as an extension to a business insurance policy and is not usually sold separately. Business interruption insurance typically covers losses incurred due specifically to damaged property, and this damage must usually be caused by fire, windstorms, and other disasters strike.


What exactly is covered by Business Interruption Insurance?

More often than businesses realize, a lot of claims may be covered by their overall business insurance policy. Fire damage can often be covered by general liability insurance, up to a certain amount. The cause of the fire and the extent of the damage may depend on how much coverage is received and for how long. Business interruption insurance may be able to cover the gap that general liability doesn’t before you are able to open up your doors again.

Very broadly speaking, Business interruption insurance is usually purchased with the thought in mind that it will cover traditional loss due to hurricane or fire (certain other natural disasters require additional unique insurance policies – see below). Depending on your policy, this coverage may extend to cover you based on the circumstances of your suppliers. If there is a disruption in your supply chain somewhere and damage occurred to their facility, this might cover you as well. 

Business interruption insurance also usually specifically covers damage to the property itself where the business transactions take place. So for example, you might be covered if your business property was damaged by winds from a hurricane, but you would likely not be covered if your property was fine, but there was a power outage.

LIke any policies, check with your provider for the details. Every policy is different and it really depends on your unique situation. 


What is NOT covered by Business interruption insurance?

For the most part, any situations outside of the ones listed above would not be covered under business interruption insurance. This could include, but may not be limited to, the following:

  • Business closure due to:
    • Government decree
    • Virus & disease
    • Economic downturn
    • Inclement weather (i.e. heavy snowstorm)
  • Damage due to floods (separate insurance policy)
  • Damage due to earthquakes (separate insurance policy)

Most business interruption insurance policies on the market today do not cover what is usually listed as “Virus & Disease” which the coronavirus outbreak would fall under. 


What can I do?

While your standard business insurance policies and the extensions, such as business interruption insurance and any other “act of God” policies you hold may not cover your business for the coronavirus outbreak, there have been a very few policies developed in order to respond to past epidemics, such as Ebola. This is all still very new, and these are not common and most likely not retroactive, but due to the vastness of this epidemic, we may see more policies covering this available in the future.

In the meantime, speak to your insurance agent to see what is covered and how we can help you. It is best to look at each individual policy. 

Contact us for if you need help finding an agent.