Will my business disruption insurance cover me during a shutdown?

FAQ Answer

Unfortunately, it’s unlikely that you will find coverage through your business disruption coverage. Generally, the triggering event for coverage would include physical damage; a pandemic is not considered physical damage. Also, under business disruption coverage there can be Civil Authority coverage, this too generally is triggered by physical damage. 

Standard policies also usually contain an exclusion for viral pandemics or pandemics. These exclusions arose in or around 2003, during the SARs outbreak and are traditionally maintained in the standard language of commercial insurance. Keep in mind that policies can differ greatly, so it’s always important to talk with your licensed insurance agent to clarify exactly what is or is not included in your coverage.

  • Business interruption insurance coverage protects against losses sustained due to periods of suspended operations; it pays loss of revenue that would have been earned if there was no business interruption. It typically provides coverage only if a physical loss to property occurs and may have specific exclusions for viral infections such as COVID-19.
  • Contingent business interruption insurance policies protect against losses from supply chain disruptions but may require the occurrence of property damage to trigger coverage. 
  • Event cancellation insurance provides coverage for expenses arising from delays, rescheduling or cancellations due to unforeseen covered events. Typically, contingent business interruption and event cancellation insurance policies exclude coverage for communicable diseases, such as COVID-19.
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