COVID-19 Losses: Businesses Turning to Insurance for Leverage

COVID-19 Losses Businesses Turning to Insurance for Leverage

The current pandemic took the world by storm, along with its various industries left in a pit of survival after lockdowns and quarantine were issued worldwide in order to cherish life. The World Health Organization (WHO) declared the coronavirus as a global health emergency not too long ago. While face-to-face transactions were reduced to a very minimum and eventually restricted, business profits and revenue started to fluctuate. Losses in several industries were issued, and bankruptcies were filed. In return, more and more businesses were closed due to the tremendous effect of the pandemic.

Recently, various sports organizations have filed business insurance claims for their respective losses in the canceled events that would have generated the right amount of revenue.

Wimbledon had its own pandemic insurance policy set aside for unexpected situations such as this after the outbreak of the SARS virus in 2003. They are expected to pay out $141 million to make up for the canceled 2020 games and events. 

In basketball, the NBA Houston Rockets team has filed a lawsuit against its insurance company after being denied its coronavirus coverage claim. Similar situations have arisen for different businesses against their own business insurance companies. In truth, these insurance companies have declined pandemic coverage claims.

Business Interruption Insurance

Today, more and more businesses are evaluating their claims for this ‘business interruption insurance’ coverage to save their losses.

Business interruption insurance is created to keep businesses safe from financial loss due to disruptions affecting their operations. Most of the accidental business interruption coverage provides insurance to make up for financial losses acquired from disturbances to the customers and suppliers. This coverage usually requires that the primary cause of the damage is of a kind that is covered in connection to the company or business’s property, from cars to buildings.

In the context of commercial properties’ insurance policies, this business interruption coverage is applied when the policyholder himself goes through a “direct corporal/physical loss of… or damage to…” an insured possession covered by the cause of the loss. Today, in terms of the pandemic-related business interruption, many insurance providers may argue on whether the ‘corporal/physical loss’ prerequisite is applied to the situation.

Some of the other insurance policies and additions in terms of coverage to basic property insurance rules (with the inclusion of those turned over to policyholders in the health care aspects) supply insurance coverage for losses brought upon by viruses or infectious diseases without the need of the physical damage requirement to the insured business.

Small-time businesses are especially vulnerable to the pandemic losses and are hence more susceptible to leveraging their insurances to cover for their losses. The business interruption insurance is one of the tickets to getting the rightful compensation and financial help that they need.

Civil Authority Coverage Clause

With the government issuing strict limitations on several types of businesses, the Civil Authority coverage clause of regular business earnings coverage may be able to retrieve the losses caused by this restriction. Companies are using this clause to try to save their industries and appeal to providers. On the other hand, this coverage clause includes a property damage prerequisite referring to a neighboring property.

Dependent Property Insurance/Supply Chain Coverage

Business owners have been searching for ways to support their coverage claims and one of the policies they can hold onto is the dependent property insurance. This kind of insurance is dependent on the condition of whether the threat of the coronavirus is considered as property damage. Insurance coverages such as this usually can only be applied based on the prerequisite that substantial cost on the property is justified.

Specific Policy Coverage for Viruses

As opposed to Wimbledon, who has prepared for future pandemic incidents, most businesses do not have explicit insurance policies that cover for such future damages. However, according to Forbes, that does not nullify insurance claims for the pandemic. According to a Reuters report, the French insurance firm in Paris named Axa has been ruled by the commercial court to pay the rightful financial compensation to a restaurant concerning its coronavirus losses.

With this, specific insurance policy for viruses does not matter. Even without the explicit policies that will obligate insurance companies to pay off losses amidst the ongoing pandemic, businesses can get coverage with the justification of their losses. In consequence, several companies have set forth to follow the steps to get their own insurance.

The Bottom Line

If you are a business owner suffering from a loss due to the ongoing pandemic, it is time for you to talk to your insurance company and ask for help in compensation. The coronavirus has undeniably done a lot of damage not just to the health of the public but also to the economy. Perhaps the most affected are the small-time businesses that are now relying on insurance coverages to make up for their losses in the industry.

Reaching out to your insurance provider covering your business is the best course of action at the moment. You can request a complete copy of the policy of your business insurance, which includes a comprehensive list of the terms and conditions, the inclusions, provisions, and more. By going through the complete policies, you can identify whether your insurance covers your situation at hand. 

You can look for specific keywords that will validate your claims on the pandemic insurance coverage of your property. You can also take note of your losses through documentation and compilation of relevant information. Many insurance agents may discourage business owners not to file for insurance coverage claims, citing the reason that it will only be denied in the long run and specific insurance rates may rise as a result of the failed claims.

However, creating fear has been the strategic technique to cheat policyholders of their rightful claims. With the fear of the virus and losses behind us, the courage to pursue what is ours for justice should prevail. The economy is what keeps us going with it being the source of finance and jobs. If it is not revived and insurance policies hinder businesses, the future might be bleak for all of us.