Here’s our take on business interruption insurance: First, we don’t make the call, meaning only the insurance companies apply policy language to situations presented. That said, we believe the insurance industry has intentionally, and effectively, insulated itself from pandemic situations like this. Guidance we’ve received directly from carriers reinforces this.
We have been working with our insurance carriers to understand if, and where, coverage exists. We anticipate that in most, if not all cases, there will be no coverage for claims due to a loss of income from COVID-19. Most insurance policies are clear that in order for there to be Business Income coverage, there must be a "direct physical loss to property", such as a fire, sprinkler release, vandalism, or other direct damage, first.
Further, the 'direct physical loss' trigger contains an exclusion for losses arising from "bacteria, virus, mold, or fungus..." As mentioned, we believe the industry has insulated itself from the economic fallout of a pandemic.
We have received some specific notices from carriers stating that there will be no coverage granted for COVID-19 claims. Most carriers, however, have not issued guidance other than to say that when responding to a claim, they will determine if coverage exists by applying various provisions of the policy. Due to the lack of specific guidance, we believe that for some of our clients, coverage may exist, depending on circumstance, industry and details on the loss. As we have more details, or learn about legal challenges to this language, we will relay them to you. If you feel that you would like to open a claim with your insurance carrier, the team at Gordon Atlantic Insurance Agency is ready to assist
For what it’s worth, most billing departments are offering flexibility, based on case by case situations. Where cash flow is the first issue with most businesses today, it’s one step.
We are all in this together. We will help in any way we can.