With every passing day, as the coronavirus spreads, we get more inquiries about how business insurance may or may not respond to virus-related business interruption, illnesses, etc.
Here are some general comments on the subject, relating to various policies your business may have (in short, don't expect too much from your business insurance, relating to this health crisis):
- BUSINESS INTERRUPTION-lost business income, due to lack of inventory or materials, sick employees, quarantines, etc. is typically NOT covered. Business Interruption usually requires "physical damage" (e.g. destruction to a building) to an insured business location, resulting from a "covered cause of loss" (e.g. fire, pipe break, weather event, etc.)
- WORKERS COMPENSATION- workers compensation insurance coverage typically requires that an illness be triggered by an event at the workplace or result directly from the work being performed (e.g. worker becomes infected while employed at hospital or nursing home).
- GENERAL LIABILITY-- If you are sued for negligence in failing to take reasonable steps to keep your building virus-free (e.g. since you did not hire a company to disinfect the building, many people got sick), your commercial general liability policy may defend such a lawsuit, but following the 2003 SARS outbreak, many carriers added a communicable disease exclusion, which would exclude coverage.
- ENVIRONMENTAL/POLLUTION POLICY-certain types of environmental/pollution policies, with special endorsements, may pay to decontaminate an insured location.
If you recall, with "Super Storm" Sandy, the government stepped in to designate the storm a "Super Storm," (so that insurance carriers were forced to provide coverage) rather than a "Hurricane"
(such a designation would have prevented coverage.) Also, the government created a fund after 9/11, and has routinely made FEMA funds available for disasters. It's hard to say how the government may (or may not) make up for
limitations... time will tell.