With the economic uncertainty surrounding businesses negatively impacted by the new coronavirus, you may assume insurance coverage will be there to help. Unfortunately, insurance policy exclusions – or provisions that eliminate coverage for a certain type of risk – will exclude coverage for virus-related damages, leaving policyholders with no recourse.
Because of the influx of business interruption claims during and after the SARS outbreak beginning around 2006, many insurers added exclusions to standard commercial policies that exclude coverage for any losses caused by viruses or bacteria. This policy language allows insurance companies to avoid paying out hundreds of billions of dollars in business interruption claims because of the COVID-19 pandemic.
What To Look For In Your Policy
- Virus and Bacteria-Related Insurance Policy Exclusions
Unfortunately, many policyholders will find that their policy does not provide coverage for business interruption losses as a result of Covid-19 because losses due to viruses are excluded. This exclusion became widespread beginning in 2006, when the Insurance Services Office, Inc. (“ISO”) created a form in response to the SARS outbreak. ISO forms are commonly used in many commercial insurance policies, and the insurance industry adopted this form – known as ISO form CP 01 40 07 06 – as a standard part of their policies.
That form is titled “Exclusion for Loss Due To Virus Or Bacteria” and provides, in relevant part:
- We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.
- The exclusion goes on to specifically state that it applies, among other things, to “business income,” i.e., business interruption.
Other policies have “pollution” exclusions that may define a “pollutant” to include a virus. If your policy has these exclusions or some variation on them, unfortunately there is very little chance of coverage for your business interruption losses.