The landscape for businesses amid the COVID-19 coronavirus outbreak is constantly changing. With closures ordered across the country by federal, state and local authorities, many businesses now find themselves in a difficult position.
The recent passage of the new Emergency FMLA Expansion Act and Emergency Paid Leave Act makes it even more critical for businesses to ensure they have the capital to cover all necessary expenditures — while possibly having little or no revenue stream.
The good news is that your business may already have insurance coverage to assist you during this difficult time. Below is a summary of several common insurance coverages that may provide some relief from the financial stress caused by COVID-19.
If you believe that your business insurance policy may contain some type of business interruption coverage it is critical that you promptly contact your insurance agent and notify your carrier of a potential claim. Then, immediately begin to document and track your losses.
Since every insurance policy differs, please contact Tzangas Plakas Mannos Ltd. at 330.455.6112 if you need assistance reviewing your policies to determine whether your business may be covered.
Generally, there are three types of business interruption insurance coverages:
A. Business interruption
B. Contingent business interruption
C. Civil authority coverage
Your commercial liability insurance policy may contain one or more of these coverages. However, following the SARS outbreak in 2003, some insurance carriers began excluding viral or bacterial outbreaks as a qualifying disruption. It is important to review your policies and all applicable endorsements to identify whether your policy contains such an exclusion.
A. Business Interruption Coverage
Business interruption coverage is typically utilized to cover loss of income from a direct interruption to your business caused by a disaster. The language of your particular policy will be key to the determination of coverage. Depending on the definition of “covered cause of loss” used in your policy, a claim due to COVID-19 related business closures or restrictions may or may not be covered. Additionally, if your business interruption coverage was added as an endorsement, rather than part of your standard policy coverage, it may provide broader coverage because you paid an additional premium for it.
B. Contingent Business Interruption Coverage
Contingent business interruption coverage allows a business to recover revenue that is lost as a result of an interruption of business at the premises of your customers and/or suppliers. Once again, the language used in the contingent business interruption coverage may be key as it likely refers to the “covered cause of loss” under your business interruption coverage.
C. Civil Authority Coverage
Civil authority coverage encompasses losses where a civil authority, such as a federal, state or local government, limits access to or from your business’ premises. Additionally, if your business has contingent business interruption coverage, then a civil authority’s interruption of your suppliers and/or vendors may also provide the basis for coverage of the resulting lost revenue.
As of yesterday evening, Ohioans are under orders from the governor, lieutenant governor and director of the Ohio department of health to stay home for two weeks. During this time, businesses and operations deemed “essential” ‒ including grocery stores, pharmacies, religious entities, gas stations, financial and insurance institutions, hardware and supply stores, critical trades, and restaurants for consumption off-premises among others ‒ may stay open. Those deemed “non-essential” have been ordered to stop operations except Minimum Basic Operations (as defined in the Order). Additionally, Governor DeWine has ordered the postponement of elective surgeries and procedures in hospitals, clinics and doctor’s offices. Other states have or will soon be doing the same.
Clearly, we are in a unique and critical time in our nation’s history. In order to navigate these unchartered waters successfully, businesses will need to be more resourceful and innovative than ever before. Tzangas Plakas Mannos Ltd. is here to give you sound guidance and advice in these turbulent times. If we can be of any assistance to you, do not hesitate to call us at 330.455.6112.