Business policy language and terms vary. For any insurance, policyholders should read the policy carefully and talk to their insurance company and agent to determine what coverage applies.
Business interruption insurance generally covers financial losses that occur when a company can no longer do business due to direct physical loss of or damage to its property by a peril covered by the policy.
A related product is contingency business interruption insurance, which covers indirect losses when suppliers or customers are affected.
Some business interruption policies extend coverage for “civil authority” orders that restrict access to property because of damage to nearby property by a peril covered under the policy.
Some business interruption policies extend “extra expense” coverage for necessary expenses that would not have incurred if there had not been direct physical loss or damage to the property by a peril covered under the policy.
Some policies exclude viruses, epidemics, and pandemics.
Some business interruption and business insurance policies are issued by surplus lines insurance companies. Surplus lines companies are required to settle claims promptly and correctly. However, they are generally not subject to state regulation. TDI doesn’t review surplus line policies or rates.
Event cancelation insurance covers economic losses due to unforeseen cancelation of a scheduled event. Covered causes of loss are typically those that physically cause the event to be canceled. Policies vary so it’s important to read the policy and check with your agent. Some policies exclude viruses, epidemics, and pandemics. Some would only cover coronavirus if a communicable disease endorsement was added.
General liability insurance could cover bodily injury claims from third parties for harmful exposure or failure to guard against risk of exposure to the virus. There could be exclusions for epidemics, pandemics, viruses, or communicable diseases.
Workers’ Compensation pays for medical bills and some lost-time income for employees who have been injured or contracted an occupational disease as a result of their employment. Claims are reviewed on a case-by-case basis to determine whether the exposure to a virus occurred in the course and scope of employment instead of a disease that the general public is exposed to outside of employment.
Options for businesses
The TDI complaint process can resolve complaints when a company clearly violates the terms of a policy. However, we are often unable to resolve certain contract disputes between policyholders and their insurers, particularly if they involve a disagreement over insurance policy language not already interpreted decisively by the courts. We note that business interruption policies are the subject of ongoing litigation, including multiple federal class action lawsuits, related to the COVID-19 outbreak.