Friday, March 13, 2020

Business: Interrupted (COVID-19 edition) [Updated]

[Scroll to bottom for update]

We've blogged on the subject of Business Interruption coverage before, most recently here:

"[W]hen a business must temporarily close its doors due to damage to or destruction of business property, Business Interruption insurance coverage pays for business income lost while the property is rebuilt. This coverage is intended to help keep the company in business while recovery is underway."

In that case, it was a burned up food truck, but we've also addressed weather and even civil unrest-related cases. But what about health-related ones, specifically as they may arise from businesses deciding to (temporarily?) close their doors "out of an abundance of caution?"

Well, got this from one of my P&C gurus:

"In the event of my absence, if anyone for commercial lines calls and asks if there is any business income coverage due to their business shutting down during the Coronavirus outbreak, the answer is "No"."

And why is this?

"No direct physical loss."

Which makes sense, since the physical premises haven't actually been affected.

But what if the government mandates that your business close up (at least temporarily)?

Still outta luck.


Same reason.

The key is that the coverage is tied to the physical premises, not the business itself.

Caveat: This is true at least in Ohio; as always, consult with your own agent about your specific coverage.

UPDATE: I asked my two gurus "if BI coverage doesn’t extend because no physical loss, is there some kind of policy/coverage an owner can but that would?"

Both told me no.

I did point out to a Twitter follower that perhaps such coverage might be available through a Lloyd's syndicate, but that it would likely be prohibitively expensive (especially now, in the middle of the pandemic).

[Hat Tip: FoIB Teresa S and Bill M]
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