The coronavirus is wreaking havoc on supply chains, interrupting business and eliminating profits. Can insurance help? Maybe.
Insurance products to help businesses deal with income losses are commonplace. But typically, that insurance is only triggered when there is physical damage to insured property. The coronavirus doesn’t damage property, right? Maybe it does. What happens when contaminated water backs up or leaks into property? Insurance often provides at least some coverage for that. If that can be covered, why can’t contagions like coronavirus? Some policies even cover “suspected” contamination.
Sometimes policies don’t even require property damage, despite the common notion that they always do. For instance, a bar in California was recently covered for the loss of an operating permit, a court ruled. The policy covered “loss of use” of property in addition to property damage. The language of the policy’s triggering clause is therefore critical.
What about problems with your business’ suppliers that affect you? The vast majority of financially affected businesses have yet to experience outbreaks in their operating areas. Instead, outbreaks are overseas in production zones. Contingent business income insurance is a sub-type of business insurance that covers business losses when the interruption occurs at another business yours is dependent on. Your policy may include this coverage in the fine print.
Another way to find coverage is when access to a business is barred by a governmental order, such as a quarantine or business evacuation order. This is similar to businesses that lose customers when an evacuation order is in place due to a threatening catastrophe like a wildfire. These coverages may provide businesses some relief as the disease spreads.
Finding insurance for business losses due to the coronavirus will require creative thinking. It will likely face resistance from insurance companies, because they will typically try to deny any claim that isn’t obviously covered. Don’t take no for an answer. Consult a professional.