The insurance industry is reacting to the recent realities that the Ebola virus has the potential to have an impact on U.S. based businesses. NAS Insurance Services recently announced that it will offer Ebola Business Interruption Coverage in conjunction with Prospect Insurance Brokers Ltd and the Ark Syndicate at Lloyd’s of London. This coverage is intended to fill a gap that exists in current Commercial Business Owner policies.
Policies covering business property, including coverage for business interruption, are normally triggered when there has been a physical damage event. Thus, business owners faced with business interruption losses stemming from actual or potential exposure to Ebola may find themselves embroiled in a battle with their carriers over whether Ebola “contamination” constitutes physical damage under their policies. The new Ebola coverage seeks to eliminate that concern by expressly providing coverage stemming from an Ebola exposure. Additionally, even if it can be established that a traditional policy is triggered, many business owners may find their carriers relying on policy exclusions relating to “Loss Due to Virus or Bacteria.” Since Ebola is a virus, this is another hurdle which the Ebola coverage seeks to eliminate.
The new Ebola insurance will offer business interruption coverage in the event of a mandatory shutdown of a business as a result of an Ebola exposure. While this may be very useful in the event that the Center for Disease Control or another federal or state regulatory agency requires that a business close its doors for a period of time, business owners need to understand that the coverage is limited in certain respects. Voluntary shutdowns may still present a problem for business owners. Further, businesses where real or potential exposure has been reported may also still be vulnerable to losses stemming from slowdowns as a result of stigma. Business owners should take steps to assess their risk and determine whether this coverage is right for them.
It is prudent for business owners to be familiar with, and to periodically review their coverage, to assess necessary modifications. Constant changes in the marketplace or society can create new exposures that may not have existed when coverage was initially purchased. Additionally, there may be new coverage options that weren’t available when the insurance was originally procured, such as the Ebola coverage, that may be beneficial to address business risks. These considerations also have potential implications for business owners that have lease agreements and other contracts.
Experienced insurance coverage counsel can work in conjunction with you and your insurance agent to ensure that you have the necessary coverage to help limit your exposure and to ensure that your business is best protected.