COVID-19 – Business Interruption Insurance Coverage – Are We Covered?

Larry Davidson

Seems on the surface that all business operations have been interrupted or affected by the COVID-19 pandemic.  Is the interruption in business and the economy covered by Business Interruption (BI) insurance?  Seems only logical that it would be covered due to the interruption of businesses, but you need to refer to the exact wording in the BI insurance policy to determine coverage.

Any “disruption” seems to cause immediate problems for any business operations. BI coverages are typically limited to physical loss or damage, and in the context of COVID-19, the requirement for physical damage will create difficult problems of “proof” for many insured companies.  Losses caused by loss of use, or lost access to, property would not trigger such coverage.  Other losses caused by customers fear about contracting the COVID-19 virus are likewise not likely to be covered. Again, I would recommend reading your BI policy language to be certain.

The actual loss or situation giving rise to any claimed loss must be carefully identified and documented.  Losses may be caused by preventive measures, or other “social distancing” measures rather than an outbreak or actual contamination of property or business.  They might be also be caused by a supply chain interruption where actual contamination is a pending or hard to resolve question.  Policy language will dictate the stance that lost use may fall within the scope of coverage in the absence of physical loss or damage.

In the end, providing “proof” that there was physical loss or damages caused by COVID-19 will prove to be difficult, if not impossible.  It should also be noted that most policies specifically exclude coverages for losses caused by a highly infectious disease, or by “contaminants” defined with enough breadth to include viruses such as COVID-19.

Under these circumstances, BI insurance may not be the best options available for business interruption or lost revenues. It may be best to investigate the various loan options provided by the SBA to get small businesses through this time of “stay at home” orders. If you would like to discuss this further, contact Larry Davidson, CPA at


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