Is there insurance coverage for your business operation due to the COVID-19 pandemic?

By: Mark Gordon , Gaetan J. Alfano

Many of our clients have a business insurance package that includes business interruption coverage.  As to whether your company’s policy will provide coverage for loss of profits will be dependent on the language of your policy.  Accordingly, it is important to review your insurance policies, which might require you to notify your insurer within certain time limits prescribed within the policy and to determine whether there are other obligations that you must adhere to in order to perfect coverage, to the extent that coverage is available to you.

In our experience, most property insurance policies containing a business interruption provision require that the interruption result from a “direct physical loss or damage” to the insured’s property. Additionally, there may be a provision that affords business interruption coverage where a key supplier has suffered a direct physical loss to their property.  In other instances, the policy may include “civil authority” coverage, which could cover losses arising from civil authority orders that would impair an insured’s operations.

If your policy requires direct physical loss or damage to property, there may be no coverage for COVID-19 losses, even under the “civil authority” coverage provisions.

We anticipate that there will be an extraordinary number of challenges to coverage denials when businesses are forced to close because of the contamination of their premises.  We are aware of at least one suit that has already been filed in the Civil District Court for the Parish of New Orleans, Louisiana, where the insured is contending that the contamination of the premises caused by the virus is a direct physical loss.  We will be monitoring this matter closely for our clients.

Many commercial insurers adopted exclusions for infectious diseases, including flu outbreaks and epidemics. You should review your business insurance program for such exclusions, which could preclude coverage

If you have business interruption coverage and a review of your policy leads to uncertainty as to whether your policy will afford coverage for loss of profits resulting from COVID-19, our firm’s coverage team would be pleased to have the opportunity to assist you in the assessment for coverage.

Please feel free to reach out to us to discuss any concerns that you might have:

Mark Gordon

Gaetan J. Alfano

William Pietragallo, II

News & Events

Related News

March 27, 2020

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law today allocates $350 billion for a Paycheck Protection Program (“PPP”) meant to provide immediate relief to small businesses (less than 500 employees) and other eligible entities impacted by the COVID-19 pandemic. Process: The process for securing a PPP loan… Read more »

Read More
March 19, 2020

The Families First Coronavirus Response Act (Act) was signed by President Trump on March 18, 2020.  The bill becomes law on April 2, 2020.Under the new law, certain employees will be eligible to receive paid sick and family leave through December 31, 2020 for leave related to COVID 19.  Relevant portions related to employment law… Read more »

Read More

Upcoming Events

August 13, 2020

Pietragallo Partner Frank Pipak will be presenting at the National Business Institute’s (NBI) two-day event, “Human Resource Law from A to Z.” Mr. Pipak has over forty years experience in the area of workers compensation and will be speaking on day two, August 13th, under the section, “Workers’ Compensation Basics.” During this 90-minute segment, Mr…. Read more »

Read More
October 28, 2020

Pietragallo Gordon Alfano Bosick & Raspanti, LLP Partner Pamela Coyle Brecht will present “The False Claims Act Update” at the Pennsylvania Bar Institute’s (PBI) A Day in Health Law program on October 28, 2020 in Philadelphia, Pennsylvania. A Day on Health Law is a one-day, six-hour spin-off of PBI’s annual Health Law Institute. The Health… Read more »

Read More
View More News & Events