In light of recent events surrounding COVID-19 and the mandated shutdown of certain businesses and services, Ontario business owners are becoming concerned and want answers. So how does a pandemic like COVID-19 affect commercial insurance?
People want to know about Coronavirus and what, if anything, is covered by their business insurance policy. Our brokers are working hard to provide answers about Coronavirus and business insurance coverage and we hope the following helps.
What you need to know about COVID-19 and your business insurance.
The unfortunate circumstance is that basically no property or liability policies cover losses of revenue that businesses incur associated with, or directly resulting from, COVID-19 or any other virus or disease.
Moreover, our brokers are frequently being asked about two specific coverages. Business Interruption and Interruption by Civil Authority. These coverages are both triggered by physical damage caused to physical assets and are not built or intended to cover financial losses from viruses, pandemic and/or diseases.
So, as a result, unfortunately there is no coverage for business interruption and loss of revenue due to an outbreak or pandemic such as COVID-19 under any property insurance policy in Ontario… to the best of our knowledge.
In order for Business Interruption to be triggered there must be bodily injury or property damage to the building and/or its contents — it can’t be triggered on its own by a slowdown in business, closure, quarantine, etc.
Another coverage you may be wondering about is an extension called Interruption by Civil Authority but this refers to bodily injury or property damage to a neighbouring or adjacent property where business closed by order of civil authority for clean-up, investigation, etc.
There could be a number of exceptions for both Business Interruption and Interruption by Civil Authority depending upon the insurance company and the variances in coverage used within each company. At Petley-Hare, we will always review each individual policy line by line in order to give you accurate advice.
Contingent Business Interruption
In addition, if international borders are closed and physical goods can’t be shipped and/or received there might be some coverage in contingent business interruption.
Contingent business interruption insurance is an extension that reimburses lost profits and extra expenses resulting from an interruption of business at the premises of a customer or supplier.
How much of your company’s operations rely on another entity? How disruptive would a long-term computer outage be to your company’s ability to maintain normal business operations?
Today’s risk manager is faced with many of these questions and will often look to contingent business interruption (CBI) insurance to soften the financial impact of these events. Click here to read more.
Business owners, please remember…
You must comply with any warranties in your policy during a shutdown. For example, alarm systems must be activated during shutdown to trigger burglary coverage, heating systems must be kept on (during the heating season) to avoid burst pipes and if premises are completely empty, please notify us so there are no vacancy issues.
Also, another quick note and not necessarily related to business insurance — if you had an event planned, some very specific and standalone event insurance policies purchased prior to the pandemic might respond in some cases.
In closing, this is a complex issue in our current environment that warrants more investigation. We’re constantly working with member and industry partners to get further clarification.
Our phone lines are always open if you have any questions regarding your business insurance.