INSURANCE
What Does Your Policy Cover
Related to COVID-19 Crises?
References to the virus exclusions or definitions in your insurance policies may not be obvious.
By Barron S. Wall,
ARM, PMC
ICA Risk
Management Consultants
T
he virus language con-
tained in your insur-
ance policy matters,
and this may be the time to
put your insurance carrier on
notice that the virus COVID-
19 has affected your business.
It is necessary to find the references to the
virus exclusions or definitions in your insurance
policies, because they—like the virus itself—may
not be obvious.
Is virus referenced in your policy language
as fungi, bacteria, microorganism, contaminated,
communicable disease or pollutants? Or is it sim-
ply understood that when the reference to the
word “germs” is used, the definition includes
the word “virus” and therefore never mentioned
in your policy?
You will want to review your property insur-
ance policy and the language that addresses the
presence of this virus on your premises causing
direct physical loss or damage, or not; and the issues
regarding coverage for property damage and,
more importantly, business income and extra
expense. These coverages are at the heart of the
issue that most likely will be brought to court
as insurers circle the wagons to deny coverage.
Their assertion will be that there is not direct
physical loss or damage to property or that you have
not proven that the virus is in fact present on
your premises. The presence of this virus has
already produced litigation, and future rulings
will have a massive impact
on the number of businesses
that are closed, out of busi-
ness or affected financially as
a result. Of course, each par-
ticular fact pattern and the
applicable policy wording
will determine the outcome.
What these circumstanc-
es all have in common are
the issues that affect the
occupancy of the business
or prevention thereof, unin-
habitability, loss of function
and non-use of the building
or premises. Furthermore,
some of the court decisions
addressed the reasonable ex-
pectations that a business
24 COMMERCE www. commercemagnj.com
owner (as insurance buyer) would expect that
insurance coverage would be provided, where
their business was uninhabitable or unusable,
especially whereby authorities ordered the busi-
ness to be closed.
The coronavirus insurance claims will most
likely be argued in the courts on a similar basis,
when insurance buyers do not have a clear path
to coverage in their insurance policies.
In order to preserve your rights and comply
with your insurance policy’s requirements, you
should discuss with your insurance broker or
legal counsel, putting your insurance carrier on
notice of a coronavirus claim.
Barron S. Wall, ARM, PMC, is from ICA Risk
Management Consultants, headquartered in Mah-
wah. Founded in 1956, ICA provides risk manage-
ment consulting services on a fee-for-service basis only
to clientele both publicly and privately held. ICA does
not sell insurance. Mr. Wall can be reached at (201)
512-9600 or by e-mail at [email protected] or visit
www.icarisk.com.