In December of 2019 Coronavirus or Covid-19 started moving rapidly across the globe, infecting Hundreds of thousands of people. The most efficient way to slow Covid-19’s spread is by social distancing and in short staying at home. City’s and States across the united states are on lock down effectively shutting down all nonessential businesses. Business Insurance is intended to cover sudden unexpected losses. The novel Coronavirus is causing massive unexpected losses worldwide. As business is interrupted, many are asking the question ”Are the resulting lost profits covered by business interruption insurance”?
What is Business Interruption Insurance Coverage?
Say there is a fire that destroyed your restaurant, or your office gets flooded out by a busted pipe potentially shutting you down for weeks. Business Interruption Insurance Coverage will cover you for any COVERED loss that ensues in lost business and revenue.
Is Covid-19 a covered loss?
Some Insurance Policies have the term Virus as an exclusion on the policy, meaning it won’t be a covered loss and therefore Business interruption coverage won’t be extended. Other policies sometimes exclude damages relating specifically to “fungi” or “bacteria” since Coronavirus is a virus there is an argument that such an exclusion won’t apply.
The first Business Interruption Case for Covid-19 just went to court in New Orleans under the premises that the loss of business isn’t due to the virus but rather due to it being actual physical damage.
How can Coronavirus be considered physical damage?
While the coronavirus is not reported to have resulted in any permanent physical damage to property, press reports indicate that it is transmitted either through the air or from touching infected surfaces. Thus, the virus can be present not only on people but also in buildings, airplanes, trains, watercraft and other enclosed spaces. In similar circumstances courts have found that the presence of harmful substances at or on a property can constitute “property damage”.
There is some great supporting case law to make the case that Covid-19 is considered physical damage. These two cases stand out. In the first one the court found that the when ammonia was accidentally released into a facility it was considered physical damage and rendered the building unsafe until it could be aired out and cleaned. The second case was when an insureds home was considered uninhabitable due to lead poisoning. Even though the main source of the lead was at least in part outside the property it was determined that the lead dust caused physical damage on the property and that the house needed to be gutted and contents destroyed.
In reaching its decision, the court stated that “property can sustain physical damage without experiencing structural alteration.”
The Coronavirus has left businesses in unchartered waters. It is often insurance that carries businesses through these waters. But policyholders need to know where to look for this life raft, and how to navigate these sometimes murky waters. It is important to promptly review policies, notify insurers of claims, and track losses, even if there are issues or questions that may ultimately preclude coverage.
Your best option is to contact a Licensed Public Adjuster to have your policy reviewed. Just like regular first party claims the insurance carrier will fight these tooth and nail to delay and undercut what it is you are owed per your policy.
We are all going through this together and we will have to fight together to have every case looked at and adjusted on accordingly we have always pushed for every business and homeowner to have their policy reviewed at no charge so you know what’s in your insurance policy.