Coronavirus (COVID-19): Does Business Interruption Insurance Apply?

by Jack P. Gibson, CPCU, CRIS, ARM; Chief Executive Officer | Apr 14, 2020
COVID Business Interruption Insurance

To say these are unprecedented times is an understatement! Almost overnight the robust economy of record profits devolved into the complete shutdown of many businesses. The dramatic business closures has left many businesses desperately seeking ways to survive. Of course, business leaders are wondering if the business interruption insurance they purchased should help them. Unfortunately, though, insurers never intended for the insurance to pay for shutdowns caused by pandemics.

Nevertheless, A number of lawsuits have been filed around the country seeking coverage. The argument for business interruption coverage to apply is usually based on the specific coverage grant for closure due to civil order. While that is indeed a specific coverage grant in most business interruption policies, the order usually must be in connection with a physical loss. Additionally, most business interruption policies also now include a specific virus exclusion that went into common use following the SARS scare in 2003. These limitations on coverage will be difficult for policyholder coverage lawyers to overcome.

You can learn more about business interruption coverage, including the civil authority coverage grant, in WebCE's course, Commercial Property Insurance. Insurance companies can also continue to train their teams on important property and casualty insurance topics and scenarios through WebCE's online training program, EXCEED

Additionally, check out the COVID-19 Resources for Insurance Professionals page in IRMI.com for articles on these topics.

Insurance CE Catalog  EXCEED Insurance Industry Training