Many New York retailers were forced to temporarily close due to the novel coronavirus, but that does not mean that business expenses stopped as well. From rent to utilities to payroll, there are costs that businesses incur even if there is no income flowing.
Unfortunately, even when stores and other businesses reopen, cash does not resume immediately. Local health department restrictions may reduce retailers’ customer capacity or the public’s willingness to go out shopping. Supply chains may no longer be in place. All of these are business losses that may be covered by your company’s insurance policy.
Does Business Interruption Insurance Provide Coverage for COVID-19 Shutdowns?
One of the most common questions when it comes to business insurance is whether business interruption (“BI”) insurance covers a retailer’s losses due to a government-ordered shutdown. The answer is that it depends on the terms of the policy. However, even if your BI policy does not provide coverage, there may be other provisions in the policy that will.
Understanding Business Interruption Coverage
Most business insurance policies include BI coverage, which pays for losses when the policyholder is directly impacted by a covered loss. However, many of these require physical damage to the premises to trigger coverage. Some also explicitly exclude coverage for viral pandemics.
The question of BI coverage for coronavirus shutdowns is an area of growing litigation. Some courts have held that infiltration by germs or bacteria may satisfy the physical damage requirement of a BI policy. Others have held that a temporary loss of use or function of the property qualifies as physical damage.
Alternative Sources of Coverage for COVID-19 Business Shutdowns
If the terms of your business’s BI policy do not cover your lockdown losses, some other provisions may help.
- Civil authority coverage – Provisions may extend coverage when civil authority orders prevent access to the premises. It is usually triggered when a government orders an evacuation.
- Contingent insurance – Contingent provisions only apply when there is no other coverage in a policy for a loss; it is contingent on no coverage. In business policies, including BI coverage, contingent insurance may pay for otherwise uncovered events like supply chain interruptions.
Contact us Today to Schedule a Consultation
Even though insurance industry representatives have been quick to offer blanket opinions that there is no coverage for the COVID 19 shutdown, there is no one-size-fits-all answer. Coverage depends entirely on your business’s policy and the facts of your situation.
Rather than taking a guess, discuss your situation with a New York City business interruption insurance lawyer. At Douglas & London, we understand business insurance policies. Call today to schedule a consultation with a professional who can help you understand your coverage, likely success of a claim, and your next best steps.
Additional coronavirus business interruption insurance resources:
- Congressional Research Service, Business Interruption Insurance and COVID-19, https://crsreports.congress.gov/product/pdf/IN/IN11295
- Hudson Valley Post, New Rules for New York Retail Stores after COVID-19 Shutdown, https://hudsonvalleypost.com/new-rules-for-new-york-retail-stores-after-covid-19-shutdown/