There is usually a waiting period of 48 to 72 hours before the restoration period begins, but it usually lasts up to 12 months (the policyholder does not usually extend this period of time). You'll need to check your policy to determine what may be covered. Business interruption insurance policies usually cover lost income, rental value, or both. In general, business interruption insurance policies require direct physical loss or property damage caused by a covered hazard (e.g.Fire, water damage, etc.
Most commercial policies exclude losses due to virus contamination and similar hazards, such as pandemics. At the end of October, the jury ruled in favor of the defendant in the first jury trial for the losses caused by the interruption of business activity caused by Covid. The federal stimulus package was enacted on March 27, and companies will need to contact banks, credit unions and other lenders to apply for loans. If this is the case, a shutdown ordered by the government due to a pandemic is likely not entirely sufficient to activate business interruption insurance coverage if there is no physical damage to the insured property caused by a covered hazard, whether the order is voluntary or mandatory. It covers operating expenses and loss of revenue for a specified period incurred by a company that closes or cannot operate normally as a result of physical damage to business property caused by a covered risk.
While some companies may currently market insurance that covers losses related to business interruption related to a pandemic, if this type of coverage is purchased today, it will not apply to the current coronavirus situation. The Center for Insurance Policy & Research (CIPR) organized a special event on business interruption and pandemics at the NAIC fall virtual national meeting held on December 3.The bill follows the model of the Terrorism Risk Insurance Act (TRIA) and would function as a public-private partnership between the federal government and insurance companies. A loss due to business interruption is usually only covered if it is the result of a covered physical loss or property damage. While business interruption insurance is a good option for most small business owners, it can be a crucial type of coverage for businesses that rely on a physical location (such as a building) or assets (such as machinery or equipment) that could be affected by problems, such as fire, theft, wind, lighting, or falling objects.
Policies for small businesses were slightly more likely to establish requirements for exclusions and physical losses than policies for large companies. The Covid coverage litigation tracker at the University of Pennsylvania Carey Law School has registered nearly 2,300 lawsuits for business insurance coverage for Covid, many of which come from companies in the food service industry. In most cases, there is a waiting period of 48 to 72 hours for a business interruption policy to take effect after an insurance-covered loss. It is only a general description and is not intended to replace consultation with your insurance broker or legal, engineering, or other professional advice.
Sometimes, business interruption policies have a “waiting period,” which is a specific number of days after the physical damage occurs, before the policy's coverage for loss due to business interruption is activated. Neil Alldredge, senior vice president for corporate affairs at the National Association of Mutual Insurance Companies, says: “Before the pandemic, most business interruption policies did not cover losses related to infectious diseases or pandemics, and while there are thousands of lawsuits pending on the issue of coverage, most believe that the language of the policy was clear. Read these FAQs to learn more about business interruption coverage and how it can help your business recover after a loss cover.
