Does Business Insurance Protect Against Interruption Due to a Pandemic?

In these challenging times, it is important to understand the type of business insurance protection helps you during the time of extraordinary circumstances, such as a global pandemic. Businesses small to large are experiencing catastrophic losses as a result of the COVID-19 virus. It is important to have in place the appropriate type of business insurance for your company that provides you with the funds needed to continue operating as a business.

Economists estimated the cost of the 2003 severe acute respiratory syndrome (SARS) worldwide at $40 billion. A 2017 economist estimated the economic loss of the next pandemic at more than 10 times the SARS amount ($500 billion) annually. Regardless the projected loss, your business needs to consider their liabilities and potential risks resulting from the outbreak.

The Basic Business Insurance Protection Every Business Needs

Every business should have in place, as part of your business insurance coverage, these protections:

  • General liability insurance – termed commercial general liability or CGL coverage, this protection typically serves as a foundation of a commercial package policy (CPP) for your business. The potential liabilities which arise and result in a third party’s bodily injury or property damage can be provided for through your business insurance CGL.
  • Business interruption/income insurance – a loss of income resulting from a prolong disruption to your business operation requires this type of coverage which pays for such loss.
  • Directors and Officers (D&O) insurance – actions taken (or not taken) by those presumably in charge of your business (including yourself) that result in damages to a third-party are covered by D&O to keep you from becoming personally liable for such loss.

How CPP Protects Your Business in a Pandemic

The impact of a worldwide pandemic on a business and its operation can and has been quantified. The ability to estimate the economic cost of such risk is why insurance can be written on this type of risk. The extent to which your business may be covered from the devastating effects of a pandemic, however, depends on the business insurance policy itself. Any conditions or exclusions contained in the policy language specific to an event like a COVID-19 pandemic could greatly impact the amount of money you are entitled to (if any).

The liabilities you incur in the operation of your business necessitate comprehensive coverage that provides for your business. Any of these parts of the CPP you purchased as your business insurance coverage should be looked at closely with an experience business insurance agent to determine how such events like a COVID-19 pandemic (or any future wide scale viral outbreak) would be covered under your CPP business insurance protection.