How to navigate exclusions in property insurance policies in pursuit of business interruption coverage?

As companies in Miami, Florida seek business interruption coverage for their losses during the COVID-19 pandemic, they face the hurdle of exclusions in their policies.

What is an exclusion in an insurance policy?

Exclusions are provisions in an insurance policy stating that some kind of loss is not covered by the policy. Under case law, the insurer has the burden of proving an exclusion to coverage, and that if the exclusionary clause is ambiguous, it is construed against the insurer.

Common exclusions

Many insurance policies have a pathogen exclusion. A pathogen is usually defined as a virus and a bacteria. Oftentimes, policies have a  “Nuclear, Biological, Chemical, and Radiological Hazards” exclusion, which extends to pathogenic agents under the “Biological Hazard” definition. This is often a roadblock to coverage, as the COVID virus can qualify as a pathogenic agent.

Another common exclusion in insurance policies is the “contamination” exclusion. While on the surface it might seem that such would bar coverage, this exclusion might actually not apply: If the insurance policy equates “contamination” with “pollution” by using them synonymously, then it can be argued that the exclusion would not apply because COVID-19 is not necessarily a pollutant.

Navigating exclusions

When insurance policies include endorsements to bring in coverage exclusions, but without any sort of consideration to you, some courts have found that such endorsements can render the exclusions void. Thus, if there is no consideration for the endorsement in your policy, it is possible that this argument can be used to combat the pathogen exclusion contained in the Biological Hazards Exclusion.

Nonetheless, if your policy does not have a general virus exclusion, that will be your strongest argument: “Virus” exceptions are very common and are always available to the insurance company when they draft policies. Thus, the fact that an insurance company makes a choice not to exclude coverage for viruses shows they intended to cover it in the policy, and cannot exclude it now.