Will my commercial insurance policy cover my loss of income due to closure as a result of the COVID-19 pandemic?
Unfortunately, the short answer is no. Generally, commercial insurance policies and traditional business interruption forms do not offer coverage for business interruption or supply chain disruption due to a pandemic such as COVID-19.
Commercial Building and Contents coverage forms respond to a direct physical loss or damage to your assets. Business Interruption is generally what we refer to as a “follow form”. This means the circumstances that trigger coverage follow the perils or criteria set out by the Building and Contents forms. Therefore your business would have to be shut down due to an insured loss to your building or contents in order to claim under your Business Interruption coverage.
Many policies also cover Business Interruption due to Closure by Civil Authority or Directive by Civil Authority. This generally has the condition that the directive is issued due to damage of a neighbouring premise. So here again, a direct physical loss is required.
I mention the term “generally” several times. All policies are different and there could be a situation where coverage is afforded so it is always best to check with your insurance broker.
In certain and very specific situations and industries there may be the option to have purchased Pandemic Coverage. This coverage is generally limited in payout and depends on specific criteria. If you believe that you may have this coverage available to you it is best to check with your insurance broker.