There is no doubt that the outbreak of COVID-19 have changed our lives forever. But for small businesses, it may cause significant economic impact. All around the world we have seen the closing of businesses, specially small and large public ones like theaters, movie theaters, museums, sports arenas, etc. All this business closures and/or reduction in sales will always raise the question: What About My Business Interruption Coverage?
Now, by definition business interruption is: “Business Income Coverage — commercial property insurance covering loss of income suffered by a business when damage to its premises by a covered cause of loss causes a slowdown or suspension of its operations. Coverage applies to loss suffered during the time required to repair or replace the damaged property. It may also be extended to apply to loss suffered after completion of repairs for a specified number of days. There are two Insurance Services Office, Inc. (ISO), business income coverage forms: the business income and extra expense coverage form (CP 00 30) and the business income coverage form without extra expense (CP 00 32). Business income coverage (BIC) is also referred to as business interruption coverage.” Source: IRMI (International Risk Management Institute, Inc.)
As you can see, most business interruption coverage’s required that an actual damage to your premises (your physical business) occur due to a covered cause of loss (fire, theft, hurricane, etc.). Unfortunately, COVID-19 is not considered a “covered cause of loss” under the standard unendorsed Business Owners Policy (BOP), nor COVID-19 causes a direct physical damage to your premises (physical location), thus no triggering of coverage can happen. On some unique cases, or on some specific industries like hospitality for example, insureds can opt to buy endorsements to this coverage (specifically the Extra Expense part of the coverage), and add certain coverages like “Special Peril Business Interruption”, or “Communicable Disease” which usually gives them a low sublimit to this type of coverage. However, this type of endorsements are very rare to come around and need approval of the insurance carrier.
There is no question that this are sad times for business owners. Business interruption coverage is very complex and requires a high technical level of insurance knowledge. We recommend that all business owners consult their coverage with their insurance companies or agents to make sure what their options are. At Deer Insurance Agency, we support local businesses in our community and we encourage our clients, friends, and communities to please keep shopping local. Small businesses are the backbone of our communities and we will do our very best to support them. Stay safe!
IMPORTANT: Coverage analysis must be done based on the specific wording of an insured’s policy. Please consult with your insurance company or agent to verify your coverage.
Deer Insurance Agency is an independent insurance agency in Jacksonville, FL. Our goal is to provide our clients with the best insurance programs for their needs. As an independent agency, we get to work with multiple insurance carriers and identify the ones that best fit our client’s needs and the communities we serve.