With the current quarantine measures in most major states, many businesses are having to put their operations on pause. Even those that are continuing to stay open are finding themselves losing customers, vendors, or partners as the crisis continues.
While businesses generally try to protect themselves and plan for unforeseen circumstances, few if any were ready for something like this.
With so much uncertainty of how long this could last or what the ultimate impact will be, businesses are rightfully worried. Many are looking to their insurance policies in hopes that they’ll provide some degree of compensation to weather this storm.
The question is…does business insurance cover something like this?
Pandemic insurance isn’t really a thing at the moment, though that could change after this. The type of insurance most closely associated with a situation like this is business interruption insurance.
What is Business Interruption Insurance?
True to its name, business interruption insurance provides coverage in situations where a company’s ability to operate is paused due to a covered loss. Also known as business income insurance, these policies may cover income loss due to a facility being closed or rebuilt after a disaster.
While property insurance covers the damages to the building itself, business interruption insurance provides for profit loss, expenses, etc. Some policies may cover the cost of a temporary location as well.
The details of your policy will determine how long the coverage stays in effect for, as well as the terms of what qualifies as a valid “disaster”.
Alternatively, some businesses utilize Extra Expense insurance for similar situations. This can provide additional money when unforeseen costs arise.
Contingent Business Interruption
Another type of interruption service is contingent business interruption. This is typically an add-on to regular business interruption insurance, providing coverage when a supplier, partner, or customer base shuts down or becomes otherwise unavailable.
There could be a number of situations where this could happen. A partner could relocate or be bought out, leaving them unable (or not wanting) to do business with you. A nearby attraction that brought in regular foot traffic could close, leaving you isolated.
While COVID-19 is certainly causing the loss of suppliers, partners, and customers, the question still remains…
Does Insurance Cover Loss Due to Outbreak Quarantines and Mandated Shutdowns?
It’s hard to give specific answers, as policies and providers can vary greatly in what they do and do not cover. While a virus such as COVID-19 doesn’t cause visible damage to a facility, it can spread within a facility, creating a physical danger to those inside. This could theoretically fall under a business interruption plan.
However, many policies specifically don’t cover viral outbreaks or pandemics.
Some policies may cover government mandates and shutdowns, but once again, exceptions can occur. This applies to contingent business policies as well. Insurance providers tend to be firm on what their policies do and do not provide coverage for. At the same time, insurance providers are receiving increased scrutiny as pressure builds from the public.
Getting the Coverage You Need
Currently, both federal and state governments are working on ways to provide support and stability to businesses in this time. What that ends up looking like remains to be seen. Regardless, businesses cannot hope for the government to always step in and provide help
They should, however, be able to trust in their insurance policies.
It’s critical that your business has the coverage it needs to thrive, regardless of what circumstances come your way. At Link-Hellmuth, we work with businesses to create policies tailored to their needs. We want to make sure you have a full understanding of what your policy covers and what risks you could be exposed to.
We also want to make sure that you get the most affordable rate possible.
While it might be too late to protect you from COVID-19, we can help make sure you’re ready for the next crisis. For business insurance in Springfield, Ohio and the surrounding communities, contact us today.