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COVID-19 and Business Interruption Insurance

As the COVID-19 pandemic continues, it is having a significant impact on many businesses, including operating losses as a result of closures, reduced operations and other unforeseen expenses.

These businesses should consider reviewing their insurance policies, particularly the “business interruption” clause to determine whether they are covered for these losses due to COVID-19.

Potential causes of business interruption may include:

  • The contamination of the premises caused by the virus
  • Employee absenteeism
  • Event cancellation
  • Supply chain disruption, or
  • Forced closure by civil authority

Business Interruption Insurance:

The general purpose of business interruption insurance is to make the insured “whole” from the damaging event and is typically included in two types of policies:

  • Perils Coverage relates to property damage from named risks that are specifically noted in the policy including fire, flood and vandalism
  • All Risks coverage relates to losses arising from any fortuitous cause except those that are specifically excluded

Next Steps:

  • Obtain a copy of your insurance policy and review the policy for potential coverage
  • Review the definition section of the policy to see if property damage as a term is defined since property damage from named risks is typically covered through business interruption and COVID-19 losses may not be considered property damage
  • Contact your insurance broker and place them and the insurer on notice of the potential claim
  • Supporting documents must be available to support a claim

Lipton Polisuk is available to assist with claims preparation and review. Many business interruption policies cover the cost of professional fees incurred to prepare and review your claim.

Please contact us with any questions that you may have.

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