Business interruption Insurance –
Defined as a type of insurance that covers the loss of income that a business suffers after a disaster. The way this coverage is triggered is by such disasters as a property loss, a fire, vandalism, a pipe bursting making it impossible to conduct your day to day business practices. With the COVID-19 outbreak business owners need to understand that the only way Business Interruption will kick in, is if the Federal Government gets involved. Epidemics and Pandemics do not result in property damage to the covered property, there will be no coverage for the lost income or any other business expenses associated with the outbreak. This is the same situation with the “Civil Athority” clause, it only applies if there was damage from a covered loss to the property itself.
To make this a bit easier to understand let’s break it down-
There is no way that you can insure yourself for all accidents, mishaps and bad luck in this world. No one could afford to cover that. So insurance was designed to offer coverages for those things that are most likely to occur. Such as fire to your premises, or theft of materials.
The way insurance companies can afford the broad coverages you do have is through a system of “spreading the risk”. They can offer coverage for tornadoes, earthquake and fires, because, typically those risks do not happen all at once and are confined to a defined area. If we covered things that could affect every or most of the businesses in the entire country, there would never be enough money to pay those claims and we could not get insurance at all.
Think you pay a lot for insurance now? The effect of covering such a loss would increase rates beyond what a business is capable of paying. Many insureds reject Terrorism Coverage now because the risk does not justify the cost.