Does my in­sur­ance cover the coro­n­avirus?

Richmond Times-Dispatch - - COMMERCIAL MORTGAGES -

QUES­TION: I have pur­chased a busi­ness owner com­mer­cial in­sur­ance 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, light­ning and wind­storm, to name a few.

Be sure to read your pol­icy so you know which per­ils your in­surer cov­ers.

The pol­icy also pro­vides cov­er­age for busi­ness in­ter­rup­tion, which helps pro­tect against lost in­come due to a cov­ered peril.

But what about ap­ply­ing it to a pan­demic?

“Com­mer­cial prop­erty poli­cies of­ten in­clude busi­ness in­ter­rup­tion cov­er­age, which 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,” ac­cord­ing to the In­sur­ance In­for­ma­tion In­sti­tute, an in­dus­try as­so­ci­a­tion.

“Imag­ine an epi­demic causes a fac­tory to shut down be­cause its em­ploy­ees are all sick. Would cov­er­age ap­ply to the lost in­come? Prob­a­bly not,” In­sur­ance In­for­ma­tion In­sti­tute said. “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,” the or­ga­ni­za­tion said.

Other per­ils or causes of loss that may not be cov­ered in­clude flood, earth­quake, pol­lu­tion, power fail­ure, nu­clear haz­ard.

But some such as 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 own­ers for lost in­come and ex­tra ex­penses in­curred un­til you can re­sume nor­mal op­er­a­tions in­clud­ing:

Rev­enue that the busi­ness would have made if it 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 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 help you es­tab­lish a con­tin­gency plan that will en­able you to deal with sit­u­a­tions like the coro­n­avirus.

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