Coronavirus (COVID-19) had already disrupted businesses on a global scale. Local and federal governments are urging people to distance themselves socially, and companies are shutting their doors. Employees might have to stay home for weeks to avoid spreading the disease, and it’s estimated that businesses will lose billions of dollars due to the pandemic. Fortunately, companies can protect themselves with business disruption insurance. However, many business owners think they are covered when they aren’t. Learn about business disruption insurance to ensure you’re covered.
Does Business Disruption Insurance Cover Losses from Coronavirus?
Your business likely has business interruption insurance as a freestanding policy or as part of your first-party property insurance. Business disruption insurance covers your company when you have to suspend operations as a result of property damage. Unfortunately, these policies don’t always cover losses due to contagious diseases, such as coronavirus, when the illness is spread person to person. However, if the virus spreads due to contaminated property or if a business shuts down due to that fear, the existing business disruption insurance policy might cover it.
You need to read your policy carefully to make sure you’re covered. Look for disqualifiers that many insurance companies wrote into plans following the SARS epidemic.
For example, many insurers no longer cover viral or bacterial infections. Your policy might disqualify both or just one. Coronavirus is a viral infection, so if your policy only disqualifies bacterial infections, your business might be covered.
Also, many insurance agencies include standard pollution exclusions in the policies. There is still some debate about what this exclusion means regarding the coronavirus. If your policy has a pollution exclusion, your company might not be covered.
Contingent Business Interruption Insurance
Contingent business interruption insurance offers additional coverage. This specialized policy covers the company’s losses due to a disruption with the customers or suppliers. Again, it’s important to read the fine print of the policy. Many contingent business interruption insurance policies include a provision that allows companies to file a claim when a civil authority prevents the business from operating. Also, many policies include workplace contamination as “property damage.” The business interruption insurance also covers the cost of sanitizing businesses. Make sure your policy doesn’t contain any disqualifiers that will prevent you from making a claim.
Safety Measures to Take During a Pandemic
Business disruption insurance will help you protect your financial health during a pandemic. You will also need commercial liability insurance to protect your company against possible lawsuits. Business liability insurance can cover you if employees or customers sue you due to the spread of the virus. You can lower your risk of a potential lawsuit by taking safety measures during the pandemic. As a company, it’s critical for your employees to practice social distancing if your business is still open. That includes distancing from other employees and customers. Employees should keep surfaces clean and maintain hand hygiene by washing hands with hot water and soap. Many businesses will also need to shut their doors for the time being.
Business disruption insurance and coronavirus is a confusing topic for most. It’s hard to know if you’re covered or not. If you are not sure if your company is covered, Freeway Insurance can help you online or over the phone. A licensed insurance agent will go over your policy and help you select a pandemic business interruption insurance policy if necessary.