Thomas S. Novak, Elissa J. Glasband
Insurance and Reinsurance
March 27, 2020
interruption (BI) insurance is an optional coverage available as part of a
company’s commercial property insurance. It is intended to protect
businesses against income losses and extra expenses sustained as a result of
certain disruptions in their operations arising from a “covered cause of
loss.” There may also be riders, endorsements and other types of
specialty coverage policies such as Dependent Property Time Element coverage
that may address losses relating to the COVID-19 Pandemic.
order to ascertain whether you have coverage and the type of losses that may be
covered, some factual questions to consider include:
- Is your
business interruption policy a standard ISO policy?
exclusions are there to your policy and, what other policies may address
losses arising from the COVID-19 Pandemic?
there or has there been a known or suspected coronavirus contamination in
your business premises or in other tenants’ spaces or the common areas of
- Has any
employee of your business tested positive for coronavirus?
- Has a
customer who has visited your business premises tested positive for
you had to close your business premises as a result of known or suspected
COVID-19 contamination in your business premises or in other tenants’
spaces or the common areas of your building?
premises upon which you rely on to remain in business closed because of
COVID-19 contamination anywhere in the building?
you been ordered to close your business by a local, state or federal
authority (and identify facts to support why your business should be closed)?
you incurred expenses in setting up a temporary business location?
- Did you obtain coverage from a
broker and, if so, what representations did the broker make in regard to
what the policy would cover?
Another issue to consider is a possible
errors and omissions claim against your insurance broker. Broker
liability law differs from state to state, however, New Jersey recognizes broad
broker liability in tort, while some states like New York have narrower
contract-based broker liability.
We note that many consider the analog to
business interruption insurance to be rent insurance which generally protects
against loss of a contractual stream of income, such as rental income paid by a
tenant to a landlord, and should be considered where applicable to the context.
Finally, please note that certain
governments are considering legislation to help policyholders in dealing with
certain exclusions under standard BI policies.
If you have business interruption
questions, please contact Tom Novak or Elissa
Glasband and provide us with your policies including riders and
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