"Do I have any coverage for loss of income due to COVID-19?"
Our hearts go out to fellow businesses we love and care about. This is an unprecedented and uncertain time for us all. We have been fielding calls and emails from clients the past few days with this question.
The answer unfortunately for most businesses is no.
Here's why:
Business Interruption Coverage (BIC)
BIC protects against financial loss resulting from a company's inability to use their covered property (buildings, contents, mobile equipment, etc.). This coverage (generally) compensates for revenue they would have received under normal business operations. Coverage language can vary between carriers but would be fairly similar in how it is applied.
This is an example of what a standard policy might say:
"Business Income Coverage — commercial property insurance covering loss of income suffered by a business when damage to its premises by a covered cause of loss causes a slowdown or suspension of its operations. Coverage applies to loss suffered during the time required to repair or replace the damaged property. It may also be extended to apply to loss suffered after completion of repairs for a specified number of days." -Insurance Services Office Inc
While coronavirus is causing a tragic slowdown or halt for many businesses, it is not causing any property damage to the insured's premise. Therefore, under a standard BIC policy no coverage would apply.
Additionally, policies contain a specific exclusion of losses due to virus or bacteria:
Exclusion of Loss Due to Virus or Bacteria - We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease. -Insurance Services Office Inc
While insurance is designed to protect and indemnify a business, there is often a misconception that it covers or should cover everything. There are certain types of losses/risks that would be very difficult to accurately actuate and correctly price. War and nuclear disaster are two examples of that. If carriers included this coverage on standard policies, the pricing would be astronomical, or carriers could easily become insolvent if they had to pay claims due to war and/or nuclear disaster. The same is true unfortunately of this miserable virus.
Our hearts and prayers go out to you all who are deeply affected by this tragedy.