Category: Commercial Property

This video podcast addresses many of the business income insurance issues presented by the COVID-19 pandemic. The panelists discuss the coverage issues, including pending litigation and government mandates from an insurance agency perspective.

A NY court has ruled on a policyholder injunction claim regarding whether a business income loss was due to direct physical damage caused by the SARS-2 virus. Also included is a link to related COVID-19 coverage issues.

A primary focus of many COVID-19 business income insurance articles is whether or not there has been any “direct physical damage.” For most policy forms, that may be important when it comes to business income coverage for damage ON the described premises, but it may be far less important when it comes to coverage for business income loss due to orders of civil authority. Here’s why.

There is a belief that business closure orders by civil authorities trigger Civil Authority coverage in business income insurance policies if they allege property damage of some kind. This is a misconception that is typical of generalizations about insurance contracts that come from the failure to actually read the policy language.

Is cleaning a surface contamination a “repair”? In other words, does “direct physical loss or damage” refer to permanent alteration of property that can only be remedied by repair or replacement and not to simple impairment of the use of that property?

If a COVID-19 lawsuit asserts that a virus “contamination” constitutes direct physical loss that triggers coverage in a business income policy, doesn’t the plaintiff also have to recognize that a pollution exclusion in the policy for “contaminants” removes coverage? How can something be a contaminant in one part of the policy, but not in another?