Will my Business Insurance Help Cover Losses Due to Coronavirus?
The coronavirus pandemic outbreak within the United States is unprecedented. Therefore, claims arising out of a disease outbreak are almost unknown to U.S. courts. The answer to whether a typical business insurance package will cover losses arising out of the outbreak is – most likely no. Most business insurance packages cover losses that happen due to damage of the property of the business. Such damage is usually a critical element that is necessary to prove in order to claim coverage. The employees of the business becoming sick or the business being shut down due to a pandemic does not usually qualify as property damage.
Around 34% of small business across the United States have business insurance included in their insurance. This is a type of insurance that covers the business’s expenses (such as payroll, loans, taxes, etc.) in the event of the business’ operations being shut down. This type of insurance even covers reasonable expected profits. In order to determine whether the business’ interruption insurance policy would cover losses due to a pandemic, it is advisable to check the individual terms of the package. However, it most likely will still require some type of property damage.
What Qualifies as Damage of Property?
Usually, business insurance packages cover damage to property caused by a natural event, such as a fire, hurricane, flooding, etc. Some business insurance packages include limited coverage of the business losses when a governmental authority shuts down a business or restricts access to the business. However, such actions also typically arise out of physical damage – either to the business property itself or to the property’s surroundings. It is advisable to check the specific wording of the policy to determine whether it covers such situations.
Does Business Interruption Insurance Cover Pandemics?
Historically, business interruption insurance has covered pandemics, when such claims have been made. However, since the Ebola and Zika epidemics in 2014 and 2015, insurance companies have turned their efforts to excluding pandemics from their coverage. Today the majority of insurance companies expressly do not cover pandemics. Therefore, there has been a large increase in coverage denials by insurance companies as a result of more and more claims being filed. This has triggered a wave of litigation that will only grow in the coming months.
The insurance industry as a whole has argued to Congress that, if forced to pay out the requested coverages to business, the insurance industry will collapse. Certain solutions have been proposed, such as long-term payment plans for the affected businesses.
Will the Business Insurance Cover Coronavirus Losses in Florida?
As is the case nationally, most Florida-based insurance agencies are currently taking the position that the typical business insurance does not cover losses caused by a pandemic. However, the Florida governor has put forward the “Florida Small Business Emergency Bridge Loan Program”, which provides interest free loans to businesses to help deal with their recent losses. The application period is open until May 8th. Additionally, the federal U.S. Small Business Administration is offering business loans with just a 3.75% interest rates.