What is Business Insurance?
Also known as Commercial liability insurance, this form of coverage protects your business against claims of injury or damage caused by you or your employees. It basically protects you from financial loss.
It has its limits, and in the midst of the global COVID-19 pandemic, it’s important to know how you can and cannot use your coverage as a business owner.
Business Income Policies are even more relevant in this picture.
What does a business income policy normally cover?
Also called business interruption insurance, it is a standard endorsement that can be added to a business owner’s policy.
Business income is part of a property policy that would cover an insured for loss of income resulting from a “covered loss.”
Can I get business insurance coverage (such as a business owner’s policy) after a coronavirus-related loss occurs?
No. Insurance carriers require you to sign off that you have “no known losses” before they will issue coverage. A claim filed for an event that took place before the policy was in effect (also called “in force”) will be denied.
Does my business income policy protect me while my business is temporarily closed due to COVID-19?
No. Most business income policies require physical damage to the building covered on the policy to qualify for business income benefits. Business income loss from a virus, bacterium, or other microorganism is not usually a “covered peril.”
Am I covered if the government forces my business to temporarily close? What if my geographic area is affected by “shelter in place” rules?
Most policies do not cover a “civil authority” (any branch of federal, state, or local government) forcing your business to temporarily close. Unless direct physical damage occurs on your property or adjacent properties, coverage is usually not triggered.
However, disaster relief loans may be available to small businesses affected by mandatory closings due to COVID-19.
What if I shut down my business as a preventive measure? Will any policy cover this?
Most policies do not cover business losses from a temporary closure of this nature, whether it’s due to a mandate from a civil authority or done as a preventive measure.
Will my policy cover loss of income from reduced foot traffic from the coronavirus?
Business interruption and contingent business interruption insurance will not cover reduced foot traffic. Since the drop in potential customers is not due to a covered peril, these policies won’t compensate for the loss of income.
I had to cancel travel plans and/or purchase new tickets to get my employees home due to coronavirus. Does my policy cover these unexpected travel costs?
Travel cancellation or itinerary changes coverage depends on your specific policy. Most policies do not provide this type of coverage due to coronavirus or any type of communicable disease. Since the extra expense is not related to a covered peril, coverage is unlikely.
Does my business interruption policy cover losses related to COVID-19?
No, COVID-19 is not listed as a covered cause of loss under a standard business interruption endorsement.
If an employee contracts coronavirus, is my business responsible for related costs? If so, am I able to claim this?
All workers’ compensation claims require an employee to show that the injury or illness arose both (a) out of and (b) in the course of their employment. If they can’t demonstrate this, they will not be compensated.
Because workers’ comp statutes vary quite a bit by state, each situation should be examined on a case-by-case basis.
What do we at Uniamerica Insurance recommend for coronavirus coverage?
We recommend noninsurance ways to limit any losses, such as:
- adjusting to changing demands by shifting your business model to new service or product offerings, new customer segments, etc.
- allowing employees to work from home, canceling travel, and other methods of social distancing
- implementing safety precautions to guard against exposures
- enforcing strict employee safety guidelines
For more ideas, read our recent article “How to Build an Emergency Fund.”
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