In previous posts, we’ve discussed many different facets of commercial insurance policies and whether or not they include coverage for losses sustained due to the new coronavirus or COVID-19. While certain policies do provide coverage either directly or through endorsements, many are silent when in comes to coverage pertaining to viruses and/or communicable diseases. If your policy is silent with regard to virus coverage, it can mean the difference between the businesses being covered or not.
What Is An “All-Risk” Insurance Policy?
To understand whether your policy does or does cover COVID-19 losses even if it does not mention the words “virus,” “pandemic,” or other related terms, it is important to understand what an “all-risk” insurance policy is. Simply put, an all-risk policy covers an insured for direct physical loss or damage unless those losses are specifically excluded. This puts the onus on the insurance company to specifically enumerate all of the things it will not cover in the policy terms. A typical all-risk policy provision might begin with a section denoting “coverage” that looks like this:
We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations unless specifically excluded.
And, so even in an all-risk policy, there is usually a requirement for the insured to prove there was “physical” damage. Our firm has extensively blogged about COVID-19 issues, including the “direct physical loss or damage” requirement, specific endorsements covering losses due to viruses or pandemics, and the various specific exclusions for viruses. As with any insurance policy, you should carefully examine the specific terms of yours. Most policies that could potentially provide coverage for COVID-19 losses are unlikely to be silent as to “viruses.”
All Risk vs. Named Perils and Virus Coverage
While “all-risk” policies cover the insured for losses unless specifically excluded, named perils are slightly different. Named perils are specific damages or losses that are listed or named within a policy. This means that in the event any of the listed perils damage the insured’s property, the loss will be covered.
Typically, named perils cover damage caused by fire, lightning, freezing, riots, aircrafts, vandalism, and theft, among others. A named perils policy must therefore specifically require “virus” to be included within the policy terms in order for there to be coverage. Named perils policies do cover events that are ‘sudden and unexpected,’ but do not cover events that could have been prevented. When it comes to COVID-19 specifically, because named perils are limited to a narrow list of covered events, the pandemic is unlikely to be listed by name as a named peril in an existing policy.
COVID-19 Insurance Claims Attorneys
Businesses are struggling now more than ever to get the insurance coverage they need to stay afloat, even as ‘stay at home’ orders are transitioning to the reopening of businesses across Texas and around the nation. At Raizner Law, we know all the tactics insurance companies use to delay or deny coverage. Our experienced attorneys have successfully handled complex cases against many of the world’s top insurance carriers and aim to help businesses get back on their feet. Contact us today to see how we can help you with your COVID-19 insurance claims.