COVID-19: Business Insurance Coverage

As businesses around the country seek to recover from the many problems caused by the coronavirus pandemic, business interruption insurance may provide a lifeline.

The President’s declaration of a national emergency on March 13 in response to COVID-19, and the subsequent unprecedented measures implemented on state and local levels, have resulted in radical changes to everyday life domestically and abroad.  For businesses in the travel, entertainment, hospitality and service industries -- especially those located at popular tourist destinations like Tampa, Nashville, and Washington, D.C. -- the outbreak has already caused major losses.  These losses may be recoverable under a company’s Business Interruption insurance policy, depending upon the specific circumstances and the policy’s wording.

Two relevant types of insurance coverage implicated by COVID-19 are Business Interruption insurance and Contingent Business Interruption insurance.  Business Interruption insurance (or business income insurance) protects a business against the loss of income from business suspension or reduction caused by disasters and other emergencies.  This form of coverage is typically triggered when there is direct or physical damage to the insured property, although structural damage may not always be required.  Contingent Business Interruption insurance covers losses resulting from damage to the policyholder’s suppliers, although physical damage to their structures may be required.  Many policies contain pandemic exclusions, or other exclusions that insurers will likely argue apply to void coverage.

We recommend that business owners review their insurance policies without delay, to assess whether they are taking the proper steps to protect themselves against the risk of losses arising from the COVID-19 pandemic. Business owners should attempt to ascertain whether the COVID-19-related losses may fit within their coverage, and are not subject to any clear exclusions.  If business losses are covered, businesses must also consider how they will prove the amount of their damages.

We are available to assist in reviewing insurance policies, determining claims strategies, and representing business owners in claims disputes.  


Note: The foregoing post contains general observations applicable to many insurance policies; this is not legal advice tailored to any particular legal issue.  This should not be construed as legal advice, nor does the reading of this column create an attorney-client relationship between the reader and the Firm, or any attorney(s) at the Firm.  If you need legal advice in analyzing your insurance coverage, presenting a claim, or disputing the denial of coverage, contact a licensed attorney as soon as possible.  The Russell Firm will provide a free consultation.


[1] Business interruption policies may cover interruptions when there is no physical damage, though this is not always included.