Will my commercial policy cover a loss due to COVID-19?
The short answer is that you should ALWAYS call your agent to discuss a potential claim. Just like your CPA, or banker, your insurance agent should be available to discuss risk mitigation and potential claims.
That being said-
I can only speak to policies written on “ISO” forms, which is the industry standard for policies. Many companies create their own form, using ISO as a standard, but every policy is eventually written on “their own paper”.
How is coverage determined
As confusing as insurance policies get, they are shockingly straight forward. The confusion comes from its application vs its definition. Everything about the policy from inception, late payments, cancellations, notifications, definitions, all of those details are in the policy.
For coverage to be afforded, a direct and physical loss must occur. For example, the business has a kitchen fire, or a pipe burst damages the manufacturing equipment. Once a direct and physical loss occurs, coverage is then afforded.
Fake news when it comes to Business income/interruption
We are already seeing advertisements about how commercial policies should be paying for business income or loss of use due to the government shut down.
In many cases where the government forces the community to evacuate, coverage can be provided. This is done until the community is allowed back and the damage is confirmed. If no damage has occurred, the claim would close up to that point.
Here is the clarification- this is often due to the anticipation and government action when it comes to a covered peril such as fires, hurricanes or tornados there is an imminent danger due to a peril that is covered. Since pandemics or viruses are often specifically excluded, the discussion on coverage often ends very early in the claims process.
If Covid-19 was a covered loss, there would not be a need for the Stimulus bill.
The US government would not have needed to sign a 2 trillion dollar stimulus bill if insurance companies covered this kind of loss.
What to do from here?
Talk to your agent. For our clients, we are making claims with the anticipation of a denial. Why?
The policy tells us to do so for one.
Secondly- if the government later forces insurance companies to pay, or if they require a denial letter for any financial assistance, we are well ahead of the curve.
Picking the right insurance agent is critical
While insurance agents can often feel like a dime a dozen, well educated, experienced, and seasoned agents are far and few in between. Just like a good CPA, having the right policy in place can the same thousands, and provide the proper coverage. While this kind of loss is often excluded, knowing how to move forward from here and mitigate your risk in the future is key.