The Coronavirus vs. Business Insurance

The Coronavirus

Headlines everywhere speak of the coronavirus, officially named the 2019-Novel Coronavirus or COVID-19. It seems as if that’s all the world has been talking about lately and for good reasons too; the outbreak has been causing disruption to daily lives in monumental ways.

News headline about coronavirus cancellations

Looking at statistics alone, there have been over 170,000 cases worldwide and over 7,000 deaths to date. However, more than 40% of the cases in the world have already recovered. In China and South Korea, the curve is flattening. This is possible due to quarantines, social distancing, and adequate assistance in the forms of testing capabilities and medical attention. However, with quarantines and social distancing in motion, business owners are suffering

Financial Crisis

Omar Hassan wrote an article that brings to light the financial crisis that the coronavirus could bring about. Small business owners who rely on their business to get through their daily lives are currently struggling the most. These owners could easily lose a large majority of their revenue due to social distancing and concerns of the outbreak as a result of this avoidance.

Asian businesses in particular are suffering; many Asian business owners are finding that people are avoiding their stores. Many retail store and restaurant owners in Chinatown’s around the U.S. are unable to pay rent for this month due to the lack of income.

Therefore, I pose this question in this time of financial struggle – businesses are suffering but do their insurance policies cover viral outbreaks?

Business Interruption Insurance

An extremely important type of insurance to note is Business Interruption Insurance, which covers losses of income due to damage to the business.

It can be hard to argue that a viral outbreak can be covered with insurance. Most Business Interruption policies will only cover physical damage or loss. If a restaurant got struck by lighting and was forced to close in order to fix the restaurant, their coverage would apply in this situation. 

But say that there was a pothole in front of the restaurant preventing customers from entering. The coverage would not apply to situations like this because no direct physical damage was done to the business itself.

This also goes for viral outbreaks. The coronavirus can be seen as the metaphorical pothole and therefore may not be covered. 

However, one might argue that the coronavirus does damage business property. This is currently the argument in a dispute between Oceana Grill, a restaurant in French Quarter, and Lloyd’s of London, a U.K. based insurance market.

The restaurant’s attorney argues that physical damage is present in the form of surface contamination. Steven Badger, an attorney from Zelle LLP supporting the insurance company, argues that policy language might be the main obstacle in this claim and that the language will most likely deem the virus an uncoverable risk; it is still to be determined if coverage exists for coronavirus-related business loss.

Should you make a claim?

A business can make a claim to see if the insurance company considers the virus to be within policy terms. From an accounting perspective, insurance companies require accounting records from businesses to support the claim that there has been a loss of income. A business needs to show how much it has suffered financially and so records are needed to verify what the revenue should have looked like versus what it currently is. If there aren’t good accounting records, it’s going to be hard to make a claim.

Consider asking your insurance agent to re-quote your coverage

Policies are based on gross payroll and revenue but if these are being affected, a business should re-evaluate their policy. In fact, they might as well get a revised quote since there’s been changes to the predicted numbers. Why wait until next year when the policy is over or up for renewal?

We are also able to re-quote your coverage. If you need any assistance regarding your business and your insurance policies in these hard times, don’t hesitate to contact us as we can help find quotes and policies to help your business!

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