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Business Interruption Insurance for COVID-19

The restrictions put in place to halt the spread of COVID-19 – such as limiting crowd size, closing restaurants and taverns, and shuttering of professional sports leagues – are critically stressing many of your businesses.

One possible form of relief to the financial stress is insurance coverage, including business interruption and contingent business interruption coverages.  Business interruption insurance is generally intended to cover losses from direct interruptions to a company’s operations, such as a fire, natural disaster or other event.  Coverage may include lost revenues, rent, or utilities, among other things.  Contingent business interruption provision generally provides coverage for a loss of income related to a problem associated with a supplier, vendor or major partner.

There are likely to be hurdles to obtaining coverage based upon disruption from COVID-19.  For example, a typical business interruption provision reads:

We will pay for the actual loss of business income you sustain due to the necessary suspension of your “operations” during the period of “restoration.”   The suspension must be caused by the direct physical loss, damage, or destruction to property.  The loss or damage must be caused by or result from a covered cause of loss.

A “direct, physical loss” has been held to exclude economic losses unaccompanied by a distinct and demonstrable loss of the physical use of the business property.  Moreover, after the SARS epidemic in the early 2000s, carriers began to exclude viral or bacterial outbreaks from standard coverage.

But, coverage depends on the particular policy, and a policy review is worthwhile.  Not all insurance policies are equal in the coverage they provide.  The old adage that you get what you pay for often rings true with insurance policies because more expensive policies often provide better coverage than lower cost policies.  Also, coverage for COVID-19 related losses might depend on whether the policy provides business interruption coverage as a basic term of the policy, or as an endorsement.  An endorsement will often provide broader coverage than the base policy because of the additional premium for the endorsement.

Companies are facing business interruption losses as a result of the COVID-19 pandemic.  

© 2020 Davis|Kuelthau, s.c. All Rights ReservedNational Law Review, Volume X, Number 78

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About this Author

Brian J. Pfeil Shareholder Davis|Kuelthau Commercial Finance Litigation Technology
Shareholder

Brian Pfeil is a member of Davis|Kuelthau’s Litigation Team practicing in the Milwaukee office. His practice primarily focuses on three related areas of the law — resolving disputes over title to land for national title companies and their insured owners and lenders, performing loan workouts and complex foreclosure actions for financial institutions, and construction litigation, including the representation of residential builders and remodelers, homeowners, commercial builders, developers and many trades within the construction industry. In addition, Brian utilizes his wide variety of...

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Christopher Meuler Insurance Attorney
Senior Attorney

Chris maintains a general litigation practice with emphasis in the areas of business litigation, eminent domain, insurance coverage, appellate work, contract disputes, and bid protests. As part of his practice, he regularly serves as local counsel for a number of national law firms when disputes arise in Wisconsin.

In addition, Chris pursues his interest in politics with a concentration in election law. He has worked on numerous election recounts and nomination paper challenges and has advised both sides of the aisle on campaign finance and other election-related issues.

After completing his degrees in Economics and Political Science, Chris worked on a presidential campaign, followed by work in governmental affairs. He then served as a high school teacher before attending the University of Wisconsin Law School, where he was a member of the International Law Journal and the mock trial team.

Education

  • J.D., University of Wisconsin Law School (2001)

  • B.A., Marquette University, Economics and Political Science (1996)

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