There have been a number of articles written that give small business owners hope that their business owners will provide business interruption coverage. Many of these authors must not have read any business owners policies. As with many COVID-19 issues; whether or not there will be coverage may determine whether a small business survives.
The most asked question we are receiving from Law Firms and other small businesses is “Does Business Interruption Insurance” cover my firm if we are closed because of the Virus. Currently the answer from insurers is likely “No” but the insurer will consider on a case by case basis. This is one insurer’s response and most business owners policies have similar wording:
“Thanks for reaching out! That’s definitely the most asked question right now & I would actually refer over to the link below. If you click on the Business tab at the end of the page – you’ll see the Business Interruption Coverage is the first topic. Essentially most property insurance includes BI coverage, which often includes civil authority and dependent property coverage. This coverage is only designed to cover losses that result from direct physical loss or damage to property and this generally doesn’t apply in the case of a virus. Every situation will be looked into on a case-by-case basis though.”
For further reading click on the following Hartford Insurance Link:
Just in the last day it as been reported that there is as a restaurant in New Orleans going to court to challenge the insurers on this.
Three days ago in New Jersey, a bill (New Jersey Bill A-3844) has been introduced to force insurers to Pay COVID 19 Business Interruption claims. This bill would require insurers to change their policy language.
So currently the answer is Business Owners Policies likely will not cover the COVID-19 business interruption losses, but if either the courts or the legislature rewrites the policies there may be coverage.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080