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Commercial Property Insurance and COVID-19

At Austin & Co. we are committed to our clients during this extraordinary time. We want to provide information as quickly as possible. To that end, the Department of Financial Services in New York has instructed insurance carriers to put out a written position regarding Business Interruption coverage.

Every policyholder will receive an official mailing from their carrier, which describes the coverage provided. Not all carriers have weighed in, but there are some common themes developing.  To date, insurance carriers have generally taken the coverage position below:

Your commercial property policy covers direct physical loss to your building and business personal property at a covered premise caused by or resulting from any covered cause of loss unless excluded or limited in the policy. A pandemic is not considered a covered cause of loss.

Business income and extra expense coverage provides for loss of income and extra expense due to a suspension of operations caused by a direct physical loss. The loss must be caused by a covered cause of loss. The absence of such does not trigger your business income or extra expense coverage. A pandemic is not considered a covered cause of loss.

Civil authority coverage responds to an action by civil authority that prohibits access to your premises, which might negatively affect your ability to conduct business and generate income. There must be direct physical loss caused by a covered cause of loss to property other than the insured property in order to trigger civil authority coverage. A pandemic is not considered a covered cause of loss.

Separately, you may be aware that several states and the Federal government are considering legislation to address Business Interruption coverage and potential regulatory action to modify the policy language. Those discussions are in their early stages and we will keep you updated about any governmental action in this regard.

If you have any questions about Business Interruption or any coverage in your insurance portfolio, please contact your Commercial Account Executive or Commercial Client Service Representative.

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