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Business Interruption Insurance

How will I know if I have business interruption insurance?

We strongly encourage businesses to review their policies, including exclusions, coverage limits, and applicable deductibles. Businesses should contact their insurance companies to determine what their policies cover as each policy is different and coverage varies. Not all commercial multi-peril policies include business interruption insurance.

Will my insurance cover loss of income because of a business interruption due to COVID-19?

You will need to consult your policy to determine what may be covered. Business interruption insurance policies typically cover loss of income, rental value, or both. In general, business interruption insurance policies require a direct physical loss/damage to a property caused by a covered peril (i.e. fire, water damage, etc.) for business interruption coverage to apply.

There may be a waiting period before business interruption coverage is triggered or the business interruption may have to exceed a specified period before benefits under the policy would be payable. More information about the specific provisions of a policy can be directed to the broker, agent or insurance company.

How do I know if my policy excludes COVID-19?

Commercial policies may have exclusions for loss due to contamination by virus and similar perils. You should check your policy for a specific exclusion for viral/bacterial contamination or an incident triggered by an epidemic/pandemic/ Such exclusions would mean your insurance policy would not cover losses related to COVID-19.

What if my business is closed due to a voluntary or mandatory government order?

While you should consult your policy, in general, coverage resulting from the actions of a civil authority also requires physical damage to the insured premises caused by a covered peril. If this is the case, a government ordered shutdown due to a pandemic may likely not be fully enough to trigger business interruption insurance coverage in the absence of physical damage to the insured property caused by a covered peril – whether that order is voluntary or mandatory.

Can I buy insurance now to cover business interruption losses due to COVID-19?

Some insurance carriers may currently market insurance that covers business interruption losses related to a pandemic. However, if this type of coverage is purchased today, it would not apply to the current coronavirus pandemic. Insurers typically do not write coverage for known events, particularly where the extent of the potential damage is not readily apparent. That said, there may be insurance for specialty risks due to COVID-19, in excess (or “surplus”) lines market.An insurance producer can assist in determining the best coverages for a business, whether in the traditional market, the surplus lines market, or captive insurance market.

Does workers’ compensation insurance apply to COVID-19?

Workers’ compensation insurance could apply in cases where a person contracted the illness through workplace exposure.

What types of insurance policy may contain business interruption coverage?

You may have a specific business interruption insurance policy. But you may also have business interruption coverage as part of other policies such as a business owners package policy or in a special multi-peril policy. Policies may have available coverage for perils arising out of actions by civil authorities. The insurer or the broker/agent from whom purchased are the best resources for questions about whether there is coverage.

What is contingent business interruption coverage? How is it different from regular business interruption insurance?

Contingent business interruption insurance is broader. For regular business interruption coverage, damage to the premises may be required for coverage. For contingent business interruption coverage, the damage could be on someone else’s property, but causes your business to be impaired. Coverage can vary in a contingent business interruption policy, just like it can for a regular business interruption provision, and the broker agent or insurer should be consulted.

How does business interruption insurance treat COVID-19?

Business interruption policies currently in force may have coverage for an epidemic or pandemic and potentially could exclude viral or contagious diseases. You should check whether your policy has an exclusion for any of these circumstances about a covered period. And remember, coverage is dependent on the specific language of the policy. Careful review of the policy and consultation may identify policy provisions that permit coverage.

What about where there is a stay at home order, the business is not classified as essential, and the employees don’t work?

As explained above, business interruption coverage may require related property damage. Coverage may not be triggered without related property damage.

Should my business file a claim if I have business interruption insurance?

Yes. Whether you have business interruption insurance, coverage will be dependent on the language in your policy and what has occurred specifically with your business. It will also help the division have the most complete data possible as we work towards finding solutions.

Will filing an insurance claim impair receiving federal assistance under the CARES Act?

We do not believe that the filing of an insurance claim will or should be any kind of an impediment to accessing federal assistance funds from the CARES Act.

What is the Division of Insurance doing about this issue?

We continue to be a resource for businesses and Tennessee chambers of commerce to discuss issues and concerns related to business interruption insurance. We are also eager to engage with stakeholders at every level to discuss possible solutions for business interruption insurance coverage stemming from pandemics. We are confident that solutions can be found.

In order to help inform those discussions, the Division is working with the National Association of Insurance Commissioners (NAIC) to both engage stakeholders and to gather data related to a variety of issues including the solvency impact of insurers absorbing the claims impact of a crisis like the one we are currently experiencing.

Where can I get help understanding business interruption coverage?

Your insurance broker should be able to help you understand your coverage, its benefits, and any limitations on coverage. The company that issued the policy may have a website that explains the coverage under its policies.

Are there any federal resources during this time for my small business?

There are several potential resources available to businesses affected by COVID-19. One that was granted was The US Small Business Administration that has Economic Injury Disaster Loans for Small Business up to $2 million available for each business. To apply for SBA assistance, visit the SBA website at or call the Small Business Support Hotline – 303.860.5881

Should I be concerned about insurance fraud during COVID-19? What steps should I take If I experience fraud?

Insurance fraud is a serious and prevalent problem. The unfortunate reality is that scammers specialize in taking advantage of people even during moments of crisis like COVID-19. All of us need to be vigilant about reporting potential fraud to our Insurance Division’s office.

*This is an unfolding and fluid situation.  Please check back frequently for updates.

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