Is Business Interruption Due to Coronavirus (COVID-19) Covered by Insurance?

The short answer is that it depends on several factors—beginning with the terms and conditions of the specific insurance contract as well as other circumstances surrounding the loss.

While policies vary, typically business interruption coverage is included as part of a company’s commercial property insurance and applies when the policyholder suffers “direct physical loss of or damage to” insured property as the result of a covered cause of loss.

Without physical damage from a covered cause, business income loss is usually excluded. Many commercial property policies contain an exclusion for “Loss Due to Virus or Bacteria.” Generally speaking, civil authority and contingent business interruption coverage require physical damage to property to trigger coverage.  

Some commercial property policies do in fact include sub-limited coverage for income loss associated with communicable disease. Also, event cancellation insurance policies may cover the economic losses resulting from cancelling an event due to the coronavirus.

Courts in a number of jurisdictions have determined that contamination and other incidents that render property uninhabitable or otherwise unfit for its intended use constitutes a "physical loss" sufficient to trigger business interruption coverage. In cases where the coronavirus is a covered cause of loss, the determination of whether "physical loss" has occurred may require confirmation from a governmental authority that COVID-19 is in fact present at the insured location.  

Also, the New Jersey Legislature is considering a bill to force insurers to pay certain COVID-19 business interruption claims. It is possible other states will follow. 

Coverage for COVID-19 will be provided in certain cases, but such coverage will be determined by the specifics of your circumstances including variables such as policy verbiage and state law. 

MLA Claims, one of the nation’s most accomplished property loss consulting firms, will review your policy and circumstances at no cost or obligation. 

Key Terms

Business Interruption Coverage typically indemnifies for loss of revenue that would have been earned had there been no business disruption and the continuing normal operating expenses incurred during the time it takes to restore the damaged property.

Civil Authority Coverage typically applies when an insured is unable to access its property due to a government order as a result of physical damage to adjacent or nearby property.

Contingent Business Interruption Coverage protects against economic losses resulting from damage to the property of a person on whom the insured depends for its business, such as a supplier or a customer.

About the Blogger

Bob Landow specializes in resolving complex commercial property losses stemming from catastrophic events such as fires, hurricanes, earthquakes, and floods across the country, throughout the Virgin Islands, Mexico, and in Puerto Rico. 

Bob has handled all types of claims for clients ranging from small businesses to Fortune 500 companies and large municipalities. Bob’s experience includes handling a mine collapse for an energy company; a power failure for a major acute care hospital, and a hurricane that caused wind and/or flood damage to hundreds of city owned properties including office buildings, fire and police departments, and waste water treatment plants for one of our nation’s most populated cities. 

Bob has adjusted over $1,000,000,000 in commercial property claims including over $350,000,000 in business interruption losses. Bob reached a $264,000,000 settlement relating to damage resulting from Hurricane Katrina to three separate hospital campuses in New Orleans, Louisiana. 

Bob is a licensed public insurance adjuster in over 30 states and jurisdictions. Bob earned a B.S. in Consumer Economics from the University of Maryland and a MBA from Georgetown University’s McDonough School of Business. He lives in Villanova, PA with his wife, Arlyn, and their three daughters.

For further inquiries or to schedule a free consultation, please contact MLA Claims via e-mail adjuster@mlaclaims.com or via telephone 610.940.4400.