How Does Insurance Respond to the Coronavirus Pandemic

COVID-19 virus illustration with the word Coronavirus superimposed on it.
Image by Vektor Kunst from Pixabay

The following is an overview of how JD Chapman Agency has determined your commercial insurance will respond to claims arising as a result of the COVID-19 outbreak. We recommend that to make sure every avenue of coverage is explored, it is important that you report all potential claims to our office via email or fax so that we can have a determination made from the insurance company.

As you might expect, we have been getting many inquires as to how your commercial insurance policy would cover a loss of income to your business in the event that you must be closed, quarantined, or ordered to or have your business reduced in anyway. The bottom line from our research is there is no coverage for the above loss.

Here are the possible coverage forms we have investigated:

Business Income and Extra Expense

This coverage provides money for ongoing expenses due to a covered loss to continue your operations. The key words here are covered cause of loss. An example of a covered cause of loss would be a fire or wind storm. Unfortunately, Virus and Bacteria are not covered causes of loss and most policies have broad exclusions for anything having to do with Virus or Bacteria.

What about Governmental Action?

NY State has mandated that I close down is there coverage? Contained in many of the business interruption coverages is a provision for loss of income when a civil authority prohibits access to your premises as a result of a covered cause of loss to property at a premises other than yours. These coverages may appear in your policy as Loss of Income, Loss of Earnings, Gross Earnings, Loss of Rents, Extra Expense or Additional Expense. Once again, the civil authority component must be a covered cause of loss, which means there is no coverage for business interruption from COVID-19, given that it is a virus.

My Policy has Crisis Event Coverage will that help?

Crisis event coverage is used to provide funds to manage a crisis such as a violent act. Again, there is a specific exclusion for Virus and Bacteria.

Coverage for Employees

NY State Disability: NY State specifically states that it typically does NOT include treatment for a cold or the flu. It depends on the severity and length of the illness in a given case.

Paid Family Leave (PFL): Staying home for preventative reasons ONLY is not a payable claim, and PFL is not meant for self-care. PFL can only be used by an eligible employee to bond with/care for a qualifying family member with a “serious health condition” as defined in the regulations, or as a result of military leave event.

Workers Compensation: Workers Compensation will cover bodily injury by accident or bodily injury by disease. A disease must be caused by conditions of employment, but ordinary diseases of life are not covered.

Keep in mind that this is a fluid situation and that NY State or the Federal Government may intervene to require coverage be extended where there currently isn’t coverage.

As I mentioned before, we highly recommend that if you have any questions of coverage or think you may have a claim, please email your question of possible claim to our office so that we may follow up on your behalf.

Thank you for your patience during this difficult time.


Bruce S. Chapman

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