The coronavirus pandemic has resulted in businesses across the country being closed or forced to operation on a limited basis. Many businesses have business interruption insurance, insurance policies intended to cover instances where they cannot operate their business. The question these business owners have is this: will their business interruption insurance cover COVID-related closures and disruptions, or are they going to be left to handle the repercussions of the pandemic themselves?
The coronavirus pandemic has proved to be an unprecedented public health crisis, infecting more than two million people, and killing over 120,000 people in the United States alone. This crisis, in turn has led to a major economic crisis as many states, including New York, instituting quarantines that closed many businesses and forced others to operate on a limited basis. The result is many businesses losing some or all their income for months on end, which is disastrous for business owners who rely on their business being operational to provide for themselves and their families.
Most business owners have some form of insurance to protect against unforeseen liabilities, but unfortunately, even businesses with insurance policies covering business interruptions are unlikely to cover the COVID quarantine. This is because a business interruption insurance contract would generally require a “civil authority” coverage clause to cover costs related to the government-mandated quarantine. Alternately, it would require an “infectious disease” coverage clause to cover costs related to the pandemic.
Whether these could apply to you, and to what extent they might cover your losses, is dependent on the language of your business interruption insurance contract, however. For example, even contracts that have these clauses limit their coverage to a certain period or only cover a certain amount of liability. For example, a contract might limit its civil authority coverage to only the first two weeks of a business interruption caused by government action, or it might impose a $250,000 cap on liability coverage.
If you have a question about business interruption insurance or other issues related to business law, contact the business law attorneys at Blodnick, Fazio & Clark. They are skilled and knowledgeable in business law and commercial transactions, including issues related to insurance disputes. With offices conveniently located in Garden City, Nassau County, and Babylon, Suffolk County, the firm provides high-quality legal care at reasonable prices. If you require legal assistance concerning business startups, formation, corporate acquisitions and mergers, corporate restructuring, or another business matter, call (516) 280-7105 or fill out our contact form for a free consultation.