26 Mar 2020

COVID-19 & Business Interruption Coverage

empty airport terminal because of corona virus / COVID-19 quarantine

“How might my property policy or business interruption coverage respond to Corona Virus related problems my business is having?” – Coverage triggers are under review

Coverage Triggers

In general, the coverage trigger under a Property / Business Interruption policy is a direct physical loss to an insured location, e.g., a fire to a scheduled / covered building that leads to an interruption in your business activities. Unfortunately, claims arising out of a non-direct physical loss, e.g., communicable disease, government shutdown, inability to access a port, etc. will most likely not trigger coverage under your standard Property / BI policy. Moreover, contagious disease passed from person to person (as opposed to contamination of tangible property) has not historically been interpreted as property damage under insurance policies. Companies should review contingency planning options, rather than relying solely upon insurance.


Certain specialty Property / Business Interruption policies or endorsements apply coverage extensions, usually in the form of a sublimit, for losses arising out of Communicable Diseases. These sublimits are usually modest, e.g., $50k or $100k. Other policies have coverage for Decontamination Costs, Spoilage, Civil Authority and Ingress/Egress and Contingent Business Interruption. With these additional coverages, loss of income is usually contingent on the same coverage trigger under Property / Business Interruption, i.e., a direct physical loss arising from a covered peril.

Key Takeaways

While coverage for COVID-19 exposures is unlikely under standard Property / Business Interruption policies, this is a fluid situation and coverage positions, case law, legislation, and possible government relief “may” change in the future. Here is what you need to know at this time:

  • In general Business Interruption is not applicable to communicable diseases and pandemics on standard policy forms, although coverage depends on the language of specific policies.
  • The coverage issues will undoubtedly be addressed by insurance carriers (and the Courts) when claims are submitted.
  • We’re available to review specific coverage terms and are more than happy to assist clients in noticing any and all claims and being an advocate.
  • Note only the insurance carrier can issue a formal coverage determination, and only after fully investigating a formally submitted claim.
  • We encourage you to track and record all losses and extra expenses relating to the COVID-19 event, regardless of whether you intend to submit an insurance claim.
  • Your Diversified team is readily available and here to support you.

*Please be advised that any and all information, comments, analysis, and/or recommendations set forth above relative to the possible impact of COVID-19 on potential insurance coverage or other policy implications are intended solely for informational purposes and should not be relied upon as legal advice. As an insurance broker, we have no authority to make coverage decisions as that ability rests solely with the issuing carrier. Therefore, all claims should be submitted to the carrier for evaluation. The positions expressed herein are opinions only and are not to be construed as any form of guarantee or warranty. Finally, given the extremely dynamic and rapidly evolving COVID-19 situation, comments above do not take into account any applicable pending or future legislation introduced with the intent to override, alter or amend current policy language.