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Is Business Income Lost as a Result of Covid-19 (Novel Coronavirus) Covered by Insurance?

On Behalf of | Mar 25, 2020 | General Liability

In Arizona and worldwide, businesses big and small are frantically trying to figure out how to make ends meet with the hugely disruptive Covid-19 closing their businesses under government mandate, reducing their service options to take-out or delivery, having their supply chains compromised, or simply due to a significant reduction in consumer traffic.

Whether and to what extent your business may be covered for a catastrophic income loss event such as Covid-19 depends on the coverage you’ve purchased and the language in the policy(ies).  So, track down a copy of the full policy to evaluate the events that trigger coverage.

Generally speaking, two different coverages may be implicated by Covid-19: business interruption insurance and/or contingent business interruption insurance.  Business interruption insurance is a coverage that replaces business income under triggering events and may help cover lost income, along with things like operating expenses, loan payments, taxes, etc.  Contingent business interruption is a coverage implicated by a supply chain issue, including the sudden closure of a vendor, among other things.  Coverage for Covid-19 will undoubtedly depend upon triggering events detailed in the policy language.

Things have taken a particularly interesting turn with cities (such as Phoenix and Mesa) closing bars and limiting restaurants to take-out and delivery options only.  Many policies have coverage for “Acts of Civil Authority” that require or result in your business being shut down.  Acts of Civil Authority may implicate coverage under a business interruption policy.  Given this situation remains fluid, check back for more updates.

In the meantime, if you’re an Arizona business that needs help reviewing your available coverage(s), please feel free to reach out to the attorneys at SG Law for insight, guidance, and possible representation.