Many businesses that purchased commercial insurance policies may be wondering if they are covered for interruptions resulting from forced and voluntary closures as a result of COVID-19. Commercial insurance policies frequently include business interruption coverage that applies when the business has suffered an interruption in its operations as the result of a “physical loss or damage” to the business’s property. 

While court interpretations of what exactly is considered a “physical loss” have varied widely across jurisdictions, courts have not addressed anything like the spread of COVID-19 and the forced and voluntary closures that have resulted. Additionally, some policies might offer “civil authority” coverage when government authorities order closures as a result of a physical loss or direct damage due to a catastrophic emergency.

However, many insurance policies also include “virus” or “infectious disease” exclusions, which may prohibit coverage for mandatory or voluntary closures due to COVID-19. Many insurers added such policy exclusions after the SARS epidemic in 2003. Still, some states are considering requiring commercial insurers to cover COVID-19 related losses, regardless of whether their policy contains a virus exclusion. One such bill is currently being debated in New Jersey, and more states may follow suit.

Ultimately, whether or not a business is covered will depend primarily on the language of the policy itself, and could likely vary from jurisdiction to jurisdiction. Companies that have experienced an interruption in business due to COVID-19 should request copies of their policies from their insurers or agents and have their policies reviewed promptly to understand if and to what extent they may be covered for COVID-19 related losses.

If you have any questions regarding whether your insurance policy covers losses related to COVID-19, or any other insurance coverage matters, contact Rudy E. Verner at BHGR Law at 303-402-1600. 

Authors: Rudy E. Verner, Jacob Scarr

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