Business owners are understandably concerned about the financial impact of the novel Coronavirus (“COVID-19”). Business interruption insurance, an add-on to commercial property insurance, may protect businesses against income losses resulting from suspension of operations. While coverage is dependent on the language of the policy, such losses may be covered when the suspension of operations is: a) caused by direct physical loss or damage at the insured premises (“Physical Loss Clause”); and/or b) caused by a civil authority’s prohibition of access to the insured premises due to physical loss or damage to nearby property (“Civil Authority Clause”). While “direct physical loss or damage” may include the presence of COVID-19 and/or airborne contaminants, losses will only be covered to the extent they are not excluded under the policy. Under a Physical Loss Clause, actual physical loss or damages is required at the covered premises, as opposed to a mere risk of physical loss or damage. On the other hand, a government-mandated business closure may trigger coverage under a Civil Authority Clause, depending on the proximity of the virus to covered premises.
LEVIN GANN P A, a full-service law firm in Towson, Maryland, has a multidisciplinary team to advise clients on business and legal implications of COVID-19. If you need assistance in assessing whether your business interruption insurance provides coverage, or any other issues pertaining to COVID-19, please call LEVIN GANN P A at (410) 321-4642 or visit www.levingann.com.