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Does my business insurance cover the Coronavirus?

Question: I have purchased a Business Owner policy for my retail business. Will my policy cover loss of income from the Coronavirus?

Answer: A Business Owner policy typically covers physical loss to property caused by a covered peril such as fire, lightening, and windstorm, to name a few. Be sure to read your policy documents so you know which perils your insurer helps cover.

The policy also provides coverage for business interruption. Business interruption insurance helps protect against lost income after a covered peril affects a business. The Insurance Information Institute offers the following explanation as it applies to a pandemic: 

” Commercial property policies often include business interruption coveragewhich pays out lost income and extra expenses incurred from a covered loss to the insured property. But unfortunately, this coverage probably does not extend to disease outbreaks.

Imagine an epidemic causes a factory to shut down because its employees are all sick. Would coverage apply to the lost income? Probably not. The reason is relatively simple: most property policies require some kind of property damage to occur that results in income loss. Sick employees probably don’t count as property damage.

The same story applies to contingent business interruption coverage, which pays out lost income resulting from a covered loss to an insured’s customer or supplier. Again: these coverages will probably not extend to lost income from a disease outbreak, since they often require property damage.”

Other perils or causes of loss that may not be covered include flood, earthquake, pollution, power failure, nuclear hazard, but some like flood or earthquake can be added by endorsement or purchased separately. Your insurance agent can advise you.

Although business interruptions coverage does not cover all causes of loss, it is still a valuable component of the Business Owner policy. For covered losses the policy will reimburse you for lost income and extra expenses incurred until you can resume normal operations including:

  • Revenue you’d normally make if your business was open.
  • Mortgage, rent and lease payments for the space where your business is located.
  • Loan payments that you need to make during that time.
  • Taxes, whether you pay them monthly or quarterly.
  • Payroll for your employees.
  • Relocation costs if you have to move to a new or temporary location because of physical damages.

No insurance policy will cover everything that can happen. Your SCORE counselor can assist you to establish a contingency plan that will enable you to deal with situations like the Coronavirus.

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Gray Poehler is a volunteer with SCORE Naples and can be reached at www.Gray.Poehler@scorevolunteer.org. Business counseling is available, without charge, from the Naples Chapter of SCORE. Call (239) 430-0081 or visithttps://naples.score.org/mentors.The SCORE business office is located at 900 Goodlette Road North, in the Fifth Third branch bank building. Office hours are 9 a.m. to noon, Monday through Friday.