Many businesses are facing a current or potential disruption in their business operations as an effect of COVID-19. In recent weeks, we have assisted many companies in analyzing whether their insurance will cover losses caused by that disruption. While many policies won't respond, some do provide coverage.

Most standard commercial property policies include "business income coverage" (so-called "BIC"). For all intents and purposes, BIC responds when a covered "cause of loss" triggers a slowdown or suspension of operations. So, the existence of BIC coverage for a COVID-19 caused slowdown or suspension depends on whether communicable diseases can be characterized as a covered "cause of loss."

Most commonly, a covered "cause of loss" is defined to include only direct physical loss or damage (e.g., a hurricane or fire). In other words, in most policies, the threat of a communicable disease is not considered a covered "cause of loss." However, every policy is different and others contain language or endorsements that modify standard coverages.

Even under traditional insurance policies, there are circumstances where coverage may still be available. For instance, actual contamination of physical property (like telephones, HVAC systems, etc.) may be a direct physical loss. Additionally, most policies have separate coverage that is triggered when a civil order prohibits access to a property or building.

Ultimately, every coverage determination is specific to both the facts and the policy language. Ice Miller professionals are experienced in reviewing and analyzing such policies and coverages.