Coronavirus Impacts: What Insurance Coverage May Be Available

This isn’t the first time that a health crisis has crippled the world. In 2003, for instance, the SARS outbreak caused a similar panic, and the insurance market learned its lesson by, generally, adding communicable-disease and similar exclusions to their policies in an effort to keep the risk of loss with insureds.
The types of coverages that a company likely have, and may apply, to the losses that it may experience as an immediate result of the most recent Covid-19 virus—including direct losses resulting from cancellations of meetings and events, and indirect losses resulting from restrictions impacting its suppliers, distribution networks, and partners—are as follows:

• Business Interruption Coverage: A Business Owner’s Policy typically contains coverage arising from business interruption, but it usually only applies with respect to a covered loss, such as theft or property damage. Some business interruption policies may offer coverage for loss resulting from a disease becoming notifiable, as compared to loss related to the disease itself. A review of these policy terms should be conducted.
• Events Insurance: This coverage is specifically designed to cover losses arising from a cancellation of an event under certain circumstances. The details of the triggers and limitations in this coverage, if purchased, should be evaluated.
• Travel Insurance: Such coverage often excludes losses from epidemics such as the coronavirus scare, and coverage for viral outbreaks such as Covid-19 may be available for an additional premium that must be paid in advance. Travel insurance also typically only provides coverage for unforeseen events, and Covid-19 could very well now be considered a “foreseen event.” A review of whether additional coverages were purchased, and would apply, may be in order.
• Credit Insurance: This insurance may protect a company from losses that may result from one of its business partners failing or going bankrupt as a result of the latest debacle. This is another coverage that a company should familiarize itself with if it has not purchased it already.

Arent Fox’s Insurance & Reinsurance group would be happy to assist you with reading the fine print of your company’s various insurance policies.