Amid the turmoil of our current situation many business owners have been contemplating the future and wondering how their business insurance policy may be of assistance. The question, "Will our business insurance cover a loss of income from COVID-19?" has been posed to me many, many times recently. While this question is quite straight forward the answer is not, and the topic has been an ongoing point of conversation in the insurance industry since the outbreak of this virus. The simple answer is that business policies will probably not provide coverage for loss of business income. I answer the question in this manner as not all commercial policies include the same policy language. Dependent on this, some policies may provide more of an avenue to argue the point for coverage than others. Most business policies are setup to help with business income loss caused by a physical loss to the business, such as a fire, lighting, windstorm, etc. With COVID-19 the loss of business income could very well not come from a direct physical loss to a business owners property.
The advice I have been giving my clients is to begin amending their business plans right now with the expectation that they will not be receiving any business income coverage. As well I feel it is wise for business owners to also begin gathering data regarding lost sales/bookings, returned funds and start compiling comparative data for submission in a potential claim. By doing both of these things they will be as prepared as possible going forward and ready to submit a claim if it comes to that. It is going to take some time for the insurance industry & the courts to work this topic through the system and allow precedents to be established. If down the road it turns out that the policy is able to afford coverage then it will be all the better for those businesses that were prepared.
For those who are interested in learning more on this topic and the current discussion, they can investigate the following articles. The first article is the least technical discussion of the three. The final two articles go fairly deep into the contract language and contain a lot of insurance jargon which may be more difficult to digest for those not accustomed to this field.
Does my business insurance cover the Coronavirus?
COVID-19 and Business Interruption
Insurance Coverage in the Time of Coronavirus
Article written by: Andrew Johnson
Insurance Agent & Owner
Frankfort Insurance Agency, Inc., Frankfort, Michigan
The advice I have been giving my clients is to begin amending their business plans right now with the expectation that they will not be receiving any business income coverage. As well I feel it is wise for business owners to also begin gathering data regarding lost sales/bookings, returned funds and start compiling comparative data for submission in a potential claim. By doing both of these things they will be as prepared as possible going forward and ready to submit a claim if it comes to that. It is going to take some time for the insurance industry & the courts to work this topic through the system and allow precedents to be established. If down the road it turns out that the policy is able to afford coverage then it will be all the better for those businesses that were prepared.
For those who are interested in learning more on this topic and the current discussion, they can investigate the following articles. The first article is the least technical discussion of the three. The final two articles go fairly deep into the contract language and contain a lot of insurance jargon which may be more difficult to digest for those not accustomed to this field.
Does my business insurance cover the Coronavirus?
COVID-19 and Business Interruption
Insurance Coverage in the Time of Coronavirus
Article written by: Andrew Johnson
Insurance Agent & Owner
Frankfort Insurance Agency, Inc., Frankfort, Michigan
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