Will Business Interruption Insurance Cover Coronavirus Losses?
Overview
One of the most pressing questions for business owners during the pandemic has been the coverage provided by business interruption insurance. According to available data and expert analysis, the majority of business interruption policies do not cover pandemics, including the coronavirus (COVID-19).
Understanding Business Interruption Insurance
Business interruption insurance is typically an extension of coverage designed to protect against losses resulting from an insured peril, such as physical damage. However, in the case of pandemics like the coronavirus, these insurance policies often have specific exclusions.
The insurance industry generally excludes pandemics from coverage, stating that they are “acts of God” and not within the scope of typical insurance policies. Exceptions to this exclusion are rare and generally limited to situations where the pandemic is predetermined by the policy terms.
Coronavirus as an Inspected Event
Almost all policies exclude cover for pandemics, including the coronavirus. However, some policies may cover losses if someone at your premises gets sick. Whether your policy falls into this category would depend on the specific wording of your policy.
Despite the exclusion, it's expected that the cost of paying out these claims will exceed NZD310 billion. For reference, the total cost of all 820 natural catastrophes in 2019 was expected to be less than 230 billion, and the total insured losses from the 9/11 attacks were less than 50 billion. This highlights the serious financial impact that pandemics like the coronavirus can have on the insurance industry.
Legal Implications and Court Rulings
While the majority of policies exclude coverage for pandemics, the situation can be more complex in specific cases. There have been numerous lawsuits challenging the coverage of business interruption insurance policies during the pandemic. If someone at your premises gets sick, the insurance policy may still cover losses.
Understanding the terms of your policy is crucial. Many policies have clauses that allow for coverage in the event of a pandemic, but these are often buried in the fine print. Reading the contracts carefully is essential to avoid misunderstandings. Strategic legal arguments, backed by attorney insights, can be key in winning such cases.
Claim Approvals and Legal Actions
Despite these nuances, several courts have ruled in favor of claimants. In many cases, courts have leaned towards the plaintiff, upholding the validity of business interruption claims. However, the legal landscape is fluid, and it is crucial to stay informed and seek expert advice during this period.
Insurers are denying claims across the board, and what was once a routine denial may now require legal recourse. As an attorney myself, I can attest to the numerous cases where business interruption claims have been upheld.
Conclusion
While the majority of business interruption insurance policies do not cover pandemics like the coronavirus, there are exceptions to this rule. It is necessary for business owners to carefully review their policies and be prepared to take legal action if necessary. Seeking professional advice can help ensure that your business is protected during these challenging times.