Experts Talk about Insurance Policies that Can Help Businesses with COVID-19 Losses

Last updated: 26 Jun, 2020 By | 6 Minutes Read

Insurance Policies

COVID-19 is spreading worldwide rapidly and not planning to stop anytime soon. With millions of patients admitted to hospitals and thousands of deaths, the virus is taking a toll on humanity, economies, and businesses around the world.

We can see that companies are going through a period full of difficulties, and currently, they are, with their best hopes, seeking adequate financial support from their insurers. Thus, we gathered industry experts’ opinions/suggestions, on “policies that can help businesses manage losses owing to COVID-19”, and represented in this round-up post. Let’s read them all.

1. BOP and Commercial Umbrella Policies for Business Owners

General Liability, BOP (Business Owner Policy), and Commercial Umbrella policies are insurance policies that business owners should have had in place before COVID-19. These types of policies are issued by P&C (Property & Casualty) companies (State Farm, Progressive, and ABA Insurance Services). These types of policies protect the business owner from damages or being sued for negligence.

Normally within such policies are endorsements that speak to business interruption. This endorsement helps business owners recoup any lost revenue in the case of their business closing for natural disasters, incidents, and/or accident-related damages – beyond the business owners’ control. Sometimes acts of terrorism are included/excluded.

Insureds should call their agents to inquire about their policies. This should’ve been option one for many businesses when the crisis first began.

Necole Gibbs is a Licensed Independent Broker based out of Atlanta, GA.

2. Sufficient Reserves to Pay your Policy

A lot of companies are denying it and saying that there’s no coverage. How deep are the companies’ pockets? Will this take them all down? Will you settle?

You can’t squeeze blood out of a rock; if there’s not the money, you can’t get it, but specific insurance requirements require paying out reserves. We’re going into it with the presumption that they can pay. Some states also have guarantee funds to give a portion of the claim back to the individuals insured. They’ve sold you these policies and taken these premiums for years, so they’re supposed to have sufficient reserves to pay your policy.

– Jay Paul Deratany, Attorney & Founder of Deratany & Kosner

3. Insurance Policies Vary with the Type of Businesses Insured

There are different types of insurance policies that can help businesses during the COVID-19 Pandemic. It really depends on what type of business and what the business does, which determines which type of policy and coverages will be appropriate.

Policyholders, with the assistance of their public adjusters and/or attorneys, will form creative arguments for insurance coverage in response to COVID-19. As court cases are decided and legislation advanced, those decisions will have a substantial impact on all other claims in the state.

The law, however, is not settled on what constitutes a “direct physical loss,” as some cases throughout the country do hold that contamination and other incidents that render the property uninhabitable or unfit for their intended use are sufficient, and others do not.

When COVID-19 claims are going to be covered, generally, there are going to be three types of business interruption insurance typically encountered.

  • Business interruption insurance is intended to compensate the insured for the income lost during the period of restoration or the time necessary to repair or restore the physical damage to the covered property.
  • Extended business interruption provides coverage, typically limited by a period of time, for the income lost after the property is repaired but before the income returns to its pre-loss level.
  • Contingent business interruption provides coverage for the insured’s loss of income resulting from physical damage, not to its property, but to the property of providers or suppliers on the one hand or consumers of its product or services on the other.

There are many insurance coverages that can be triggered for business interruption losses. There are all sorts of intricacies involved in sorting through exclusions and conditions within them not simply based on policy language, but also on how courts have approached similar cases.

For policyholders, all potentially applicable insurance should be considered and carefully analyzed with a claims expert.

– Brian Evans, Eastern Public Adjusters, Eastern Public

4. Business Interruption Policy

Business interruption policy. If you already have this policy in place, you might have a case if you’ve experienced any of the following:

  • Supply chain interruptions – You’ll have to prove a direct physical loss due to a supplier reducing or stopping delivery to your business.
  • Confirmed cases in the building – If a staff or customer caused you to have to shut down due to a confirmed case of coronavirus, you might argue that this is a direct physical loss.
  • Nearby business closings – If your business relies on customers from nearby attractions, you might claim a loss if that business closes due to coronavirus exposure.
  • Open-peril policies – If your policy covers any peril, you could claim coronavirus protection if pandemics aren’t specifically excluded.
  • Event insurance – If you already have this policy, you may have help to recover costs if you cancel your business events because of the coronavirus. However, you’ll have to meet specific criteria, so read the fine print of your policy.
  • Workers’ compensation – This insurance can pay for medical bills and lost wages based on a percentage of average wages. However, it might only cover the illness for workers with an increased risk of catching coronavirus, like those working in the hospital.
  • Trade credit insurance – If a key client can’t pay their outstanding debt for your business’s products, this policy might help cover some of their unpaid bills.
  • Cyber insurance – With the high probability that you have employees working from home, this insurance can help prevent losses from cybersecurity scams or fraud.

If your current business policy doesn’t protect you, shop around for other business insurance that may help, like contingent business interruption, event insurance, or trade credit insurance.

– Megan Shepherd, Insurance Writer in Finder

5. Commercial General Liability Policies

What insurance policies cover business interruption caused by COVID-19 is actually a very complicated question and will be the source of hotly contested civil litigation across the country (lawsuits). These are the types of policies that might include coverage for COVID-19:

  • Property insurance
  • Pollution/environmental policies
  • Event cancellation insurance
  • Commercial general liability policies
  • Errors & Omissions policies
  • Directors & Officers
  • Cyber insurance

That being said, whether coverage actually exists will depend entirely on the specific policy language, which includes definitions of covered losses, exclusions, endorsements, and riders, all of which vary from one insurance company to another. The coverage will also depend on the specific type of business, and the facts about how COVID-19 impacted that business. For example:

  • Did the business close entirely because of the government shutdown?
  • Did they close for safety, without a government shutdown?
  • Also, did they have an employee or customer who had a confirmed case of COVID-19, or not?

Insurance companies are summarily denying these claims. Lawyers, like me, are in the process of reviewing different policies, and factual scenarios, to determine which of those denials should be challenged in court. As part of that process, we are reviewing the above-listed policies. The most common policy that might include coverage is commercial general liability policies. But the other policies might come into play, depending on the particular business, and factual scenario.

– Tina Willis, former law professor, Tina Willis Law

6.  On-demand Insurance Policies can Help

Flexible, on-demand insurance policies will be key to providing business owners with the ability to quickly and effectively adapt to a rapidly changing economy.

If you’re an independent contract worker booked for a cleaning job that gets suddenly cancelled, the last thing you need is to be bound to a complex, annual policy with pages of terms and conditions to sort through.

What you need is a more dynamic solution that can adapt to these sudden changes and meet you where your needs are on an on-demand basis.

Jay Bregman, the Founder and CEO of Thimble

7.  Business interruption insurance

One insurance add-on to help businesses during a pandemic called business interruption insurance, this form of coverage is typically an optional rider, an add-on feature if you will, to property and casualty policies purchased by a business. You will want to read the fine print of the policy, however, as some forms of business interruption coverage only cover loss as a result of physical damage.

– Heidi Mertlich, Owner of No Physical Term Life

8. New laws might compel insurers to offer coverage despite virus exclusions

COVID-19 insurance coverage for businesses: Some businesses that have experienced losses from COVID-19-related closures may have business interruption or event cancellation coverage. However, policyholders should carefully review their policies for virus exclusions. There is also legislation being proposed at the state and federal level that might force insurance companies to offer coverage in spite of virus exclusions.

Sara Colon, Brown Neri Smith & Khan LLP

9. Standard business owner’s insurance policy might help

Pandemic Insurance Coverage would be offered as a rider (option) on the standard business owner’s insurance policy. Currently, there are very few insurance companies that will write this coverage as a standalone insurance policy. As it stands now, the pandemic insurance policies are not cheap, and very few companies can afford the coverage. These are the only policies that can support a business during these tragic times.

What I suspect that will happen, is that the insurance industry and the federal government will work together to create a pandemic insurance coverage program similar to the terrorism insurance coverage that was created after 9/11. If they do, it should make it affordable for all small business owners to have coverage for a pandemic going forward.

Earl Jones, Agent Owner, Earl L Jones Insurance Agency

10. Workers’ compensation policies and business interruption insurance coverage

Coronavirus (COVID-19) has spread in an unprecedented manner throughout the world. The impact is not only felt by the general public but throughout various sectors and, most importantly, small businesses. Due to this, many business houses are contemplating whether they might get insurance coverage in these unprecedented times. Sickened workers working for the company may be entitled to worker’s compensation benefits, which typically would be covered under workers’ compensation policies.

Businesses should take steps to preserve insurance claims and document losses attributable to the coronavirus.

Megan Shepherd | Finder

11. Cyber & data liability policy can help recover a variety of expenses

COVID-19 is not covered by business interruption coverage. Exclusions to business interruption coverage specifically include pandemics, viruses (even the flu), and similar circumstances. This is being examined at the legislative level because businesses are turning to their congressperson or senator to question why they have business interruption coverage, but insurers aren’t covering loss related to COVID-19.

Law firms are also getting involved and pressing the issue. Some states have politicians putting bills together in hopes of passing legislation to require private insurance companies to cover business interruption related to COVID-19/viruses, and/or make it a federal requirement that the federal government covers business interruption for COVID-19/viruses. If COVID-19 has resurgence this coming winter and businesses are forced to shut down again, having a “virus protection plan” will allow for coverage to be triggered and send money to those impacted businesses.

A pandemic or virus doesn’t currently have an actuarial rating – what would insurers have to charge to cover the premium – but there is a potential we will see this in the future.

Cyber & Data Liability

In regards to cyber liability and data breaches, the COVID-19 outbreak is creating the perfect storm for these types of attacks to flourish. A cyber & data liability policy can help businesses recover a variety of expenses associated with data breaches, including:

– Notifying customers about a data breach.
– Credit monitoring.
– Restoring personal identities of impacted customers.
– Recovering compromised data.
– Costs to defend claims by state regulators.
– Fines and penalties.
– Repairing damaged computer systems.

P.J. Miller, Partner at Wallace & Turner Insurance

12. Buy-sell life insurance agreements and key man life insurance agreements

The best business insurances that can help during the Covid-19 pandemic are buy-sell life insurance agreements and key man life insurance agreements.

Here’s why:

A buy-sell life insurance agreement can protect business owners in case one of the partners passes away, and the other partner(s) want to buy out the previous partner’s vested interest in the business from a spouse or a written beneficiary like a brother or a son who may no longer want to be a part of the business. This can make or break a business, especially in these times where having no face to face contact for court dates and/or for mediation meetings would hurt a business in that situation. The insurance would motivate the vested party to take the money over staying in the business or looking for money from selling the business.

A key man life insurance agreement, similar to the buy-sell life insurance agreement, protects a business in case one of their top producing members were to pass away and leave the business in a financially bad place without their contribution. Think like a CEO, Director, Top Producing Salesperson. The life insurance would give the business enough time and capital to make up for the loss and find a new employee who could hopefully fill the gap of the previous employee. With the way Covid-19 has been, finding and hiring great employees in these higher position titles is already difficult, but doing it without a cushion of capital would be even more stressful on a business.

– Jordan Shanbrom, Life Insurance Broker, California Life Coverage

13. Income protection policy

There are a few types of business insurance to help businesses who are affected by COVID-19 losses. If you weren’t prepared for a pandemic, chances are you will definitely be prepared for the next disaster.

Business insurance should be a necessity for all business owners. One of the types of policies that would come in handy right now is income protection. This would offer protection against losing your income due to an incident beyond your control.

There are policies for Interruption Insurance to be used in the event that a business is unable to continue with the day to day status-quo due to unforeseen circumstances. This helps to continue to pay the bills when income generation activities may have ceased for a time.

SaraRouthier, Managing Editor, Outreach 360 Quote

14. A business interruption policy might help, but it depends

If a business has changed operations because of the pandemic, they may need additional coverage. In the restaurant industry, if a business adds delivery service, it will need commercial auto insurance. If they have employees who are using their personal vehicles for business purposes, the business will need to add a hired and non-owned auto policy.

If a business owner adds a service or changes their business in any way as a result of the pandemic, they should contact their insurance agent to make sure they are properly protecting the business. In some instances, a business interruption policy can help a business cover missed income due to being closed. The problem many business owners are having in relation to this type of insurance policy is that most of these policies specifically exclude pandemic or infectious disease.

Additionally, most of these types of policies are sold as an addition to a commercial property insurance policy. This means the reason for closing the business has to be a covered loss by the commercial property insurance policy. This would be covered if there was a fire that caused damage to the building. In the case of the coronavirus, there is no damage to the building. Because of no damage to the building, the commercial property policy is not triggered, so the business interruption policy is also not triggered.

Some insurance carriers do not have exclusions for a pandemic or infectious disease written into business interruption policies. If this language is not in the policy, the policy should cover the closing up to the limits of the policy.

Walt Capell, President/Owner, Workers Compensation Shop

15. Covering business losses with Paycheck Protection Program loans

I’d be surprised to see if there are any policies that are really helpful during this time, given that most have an exclusion clause to pandemics, meaning they don’t cover losses due to pandemics. But hey, the government usually turns out to be the insurer of last resort these days, and they’re covering business losses with PPP loans.

– Brent Dickerson, Dickerson Agency LLC

16. Standard commercial general liability policies or environmental insurance may help

To begin with, when it comes to liability for spreading a disease, standard commercial general liability policies include “disease” under their definition of bodily injury. So if your business is found liable for accidentally spreading a disease, there is some coverage to protect you.

Additionally, Environmental insurance goes a step further than that, covering liability for bodily injury and property damage as well as clean up crews and business interruption losses.

Supply chain insurance is one specialized form of insurance that covers you if you lose suppliers, and does not require any damage to your property.

However, during this pandemic, businesses that have losses due to COVID-19 are scrambling to find ways to cope, and many of them turn to their business interruption insurance to make claims.

Insurance coverage for contingent business interruption applies when you’ve lost income due to a loss of customers or suppliers. Unfortunately, many insurance companies are denying this coverage under their policies, claiming that the loss does not amount to physical damage, or the injury is excluded under the policy. Furthermore, if employees and customers are quarantined at home, you may think it is an obvious interruption of business, but insurance companies will try to argue against this definition as well.

Whether a disease outbreak can cause property damage is actually up for debate. It’s tough to classify a disease as a physical loss for a business, but it is possible.

It’s always important to read the fine print of the policy.

– Mel Hull, Content Development Specialist, Stewart J. Guss, Attorney at Law


Considering all the opinions, suggestions and advises, we can say that the first thing business owners should do is to check their business insurance policy through which they are seeking a claim. If you are eligible and unable to get the claim, you may take help from a lawyer. And yes, it will be vital to choose such policies in the future because no one knows when another pandemic could hit the world. And soon, these policies are likely to become a part of standard business insurance policies.

Affected, insured businesses are applying for claims; the insurance industry is getting under immense pressure to deliver excellent services. For insurers, the worst part is ‘the shortage of staff,’ resulting in inefficiency, less productivity, and delayed claims. And in the meanwhile, they are expected to pay out claims on time.

Many insurers have already outsourced insurance agency management services to reduce back-office workload. At, Insurance Support World, our team has been delivering quality insurance back- without interruption amid the crisis. If you are also planning to outsource, feel free to contact us.

Also Read: Why Your Insurance Business Needs Policy Management?

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