The short answer is that no loss of business income coverage exists with regard to the coronavirus issue. The Business Owners policy (BOP) includes loss of business income coverage but it only applies to certain types of events. That coverage is unlimited and paid at “actual loss sustained” for up to 12 months but is only triggered when the insured office is damaged beyond use by a covered peril on the policy and will only be paid during the term of the restoration of the damaged premises. Common perils covered by the BOP policy are fire, windstorm, water damage (excluding rising flood waters as mentioned), hail, burglary/theft, vandalism and damage caused by a vehicle or aircraft to name a few.
It’s our opinion that there would not be any coverage with regard to an office shutdown stemming from the Coronavirus. There just isn’t an insurance option currently available to cover the loss of business income due to a pandemic. For a dental practice owner, a loss to business income (and even property) is not insurable with regard to certain risks like a pandemic, acts of war or nuclear radiation. Even more common risks such as flood, earth movement, rot, mold or wear and tear to name a few are found in the list of excluded perils on the common Business Owners Policy (BOP) policy.
There has been some misinformation circulated about the “civil authority” provision of the policy triggering coverage but we don’t believe that would be the case. The language in the standard office policy requires that there must be damage (physical loss) to property other than the insured property, from a covered cause of loss, that leads to an action of civil authority prohibiting access to the insured property. A virus is not a covered cause of loss so even if it were deemed a physical loss, we don’t believe that would matter.
The policy also contains a secondary form of business income coverage related to an interruption in utilities services. There is no requirement of any direct physical damage to the insured office but the loss of utility needs to still be related to a covered peril. That coverage is commonly limited to $25,000 (but can be increased for additional premium) and coverage is triggered when the loss of a utility service has prevented the practice from operating for more than 24 hours. The most common utilities services interruption claim is downed power lines due to a wind or ice (storm) but coverage for power lines needs to be specifically added in most cases and we do that for our clients.
These are the only loss of business income provisions available in a BOP policy. We definitely understand everyone’s concern and wish there were an insurance solution to be offered but at this point, with regard to this virus, there isn’t any. Stay well.