My Business is closed because of 2019-nCoV, now what?

The pandemic began in December in Wuhan, China, and has since spread to more than 37,500 and caused more than 800 deaths, according to early February reporting from Johns Hopkins University. Efforts to curtail the spread of the disease have closed businesses, stopped international travel, and disrupted shipping. Consider that Wynn Resorts is losing $2.4 million to $2.6 million each day that its casino in Macau remains closed, according to The New York Times.

Most standard Business Owners Policies, or BOP’s, offer Business Income (or Interruption) coverage as part of their standard package of coverage. These policies are often built from Insurance Service Office (ISO) forms that include standard policy language that dictact how your policy will react in the event of a claim. Most often your policy‘s Business Income coverage kicks in after a covered loss, such as a fire, or large theft, a wind loss, or water loss. But what happens if your business is forced to closed because of a mandatory quarantine? Your standard BOP won’t provide you protection.

The Insurance Services Office (ISO) has released two optional endorsements for use with commercial property forms to provide limited business interruption coverage for circumstances related to the coronavirus.

There are two forms:

Business Interruption: Limited Coverage for Certain Civil Authority Orders Relating to Coronavirus andBusiness Interruption: Limited Coverage for Certain Civil Authority Orders Relating to Coronavirus (Including Orders Restricting Some Modes of Public Transportation). Neither form is numbered.

The first form modifies coverage under the Business Income and Extra Expense coverage form, the Business Income Without Extra Expense coverage form, and the Extra Expense coverage form. The form requires the insured to schedule the premises, and list a coverage period specified by number of days, weeks or months, and an annual aggregate limit of insurance. The coverage applies only if the policy otherwise covers business income; likewise extra expense applies only if the policy provides coverage for extra expense.

Coverage is for the actual loss of business income or necessary extra expenses incurred because the civil authority ordered the closing of the premises or ordered all or part of the premises to be put under quarantine to prevent infection by or spread of a coronavirus, even if the action is taken based on suspicion of a risk of contagion. Because the spread of infectious diseases is unpredictable, coverage is provided even if no disease is yet present; if an area has been struck by the virus, civil authority may order businesses closed in order to minimize exposure to the virus.

The Business Interruption: Limited Coverage for Certain Civil Authority Orders Relating to coronavirus (Including Orders Restricting Some Modes of Public Transportation) form is virtually identical to the previous form, except that it includes coverage if the civil authority orders the closure or restricted usage of public bus, rail or ferry lines, or related stations or terminals service the areas where the described premises are located.