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Morse Insurance Answers Essential Questions About Business Insurance Coverages and Additional Resources Amid COVID-19

The COVID-19 pandemic is significantly impacting every aspect of small business.

Restaurants and garden centers are offering touch-less delivery service. Hair salons are shipping custom root touch-up kits, boutiques are selling clothes on Instagram, and fitness studios are hosting virtual classes and training sessions via video conferencing.

It’s impressive to see business owners flex their creative muscles, quickly build new revenue streams, and stay connected to their socially distancing customers. However, it’s hard to ignore the fact that these new efforts are likely due to the coronavirus negatively impacting their normal course of business.

The situation we find ourselves in today is truly unprecedented. The United States hasn’t faced a pandemic like this since 1918, with the Spanish influenza outbreak. As a result, you likely have a growing list of unanswered questions about all aspects of your business, including how your commercial insurance policy factors into the equation.

The Morse Insurance team is answering two critical questions that have bubbled up over the last couple of weeks – will my business insurance cover a COVID-19-related claim, and are there any additional insurance resources for business owners?

Will my commercial insurance respond to a COVID-19-related claim?

Businesses vary in size and industry, and as a result, so do their business insurance needs. Some operations may be covered adequately by a single policy, whereas others may benefit from a personalized Commercial Package Policy (CPP). However, since a business owners policy, or BOP, protects most of our small business clients, this pre-packaged plan will be the primary focus of this blog post.

Before moving on, we feel it’s essential to review what a BOP is and what it covers.

A traditional BOP is comprised of three critical business insurance coverages (commercial property insurance, general liability insurance, and business interruption insurance) and designed to protect business owners from unpredictable events, including severe weather, fire, theft, equipment breakdown, and more. Next, let’s breakdown each insurance coverage:

  • Commercial Property Insurance covers your physical business facility as well as your property, including computers, office furniture, equipment, and inventory.
  • Liability Insurance provides financial assistance for legal and medical costs, up to the limit of your policy, in the event someone was injured on-premise, or while using a product or service of yours.
  • Business Interruption Insurance offers financial assistance to those who have suffered from a covered event and need to close their doors temporarily. This endorsement also typically covers lost income due to total property loss, the cost to rebuild or temporarily relocate, and ongoing business expenses such as payroll, rent, and utilities.

After reading this high-level coverage synopsis, you may be wondering if your BOP, or more specifically, the business interruption insurance portion of your policy, will provide some financial assistance during this unprecedented time. However, based on our experience and current understanding of the coverage, it likely will not.

For a BOP to initiate coverage, your business must suffer a direct physical loss to covered property by a covered event. For example, if a fire were to break out at your gourmet pizza shop, damaging your hardwood floors, walls, food inventory, and pizza oven, your BOP would likely be triggered. Depending on the severity, your policy would presumably cover the cost to repair the affected property, as well as any loss of income and recurring expenses during your temporary shutdown for repairs.

In the case of COVID-19, most businesses haven’t suffered a direct physical loss or damage to their property. Further complicating the situation, most business interruption endorsements specifically exclude loss of income or extra expense claims that are caused by bacterial or viral contamination.

However, no two business policies or insurance carriers are the same. Therefore, we recommend that you familiarize yourself with the coverages and exclusions specific to your policy to determine your options. We also don’t want this extremely general interpretation of a BOP to deter you from filing a business interruption claim if you’ve recently suffered a loss. To get a clearer understanding of your unique situation, please give Morse a call so we can review your specific BOP policy and, if necessary, help you file a claim.

Are there any commercial insurance resources available to business owners at this time?

How insurance carriers will respond to COVID-19-related business claims is still to be determined. However, many of our insurance partners are currently offering a few options to assist policy holders who are facing financial hardships due to COVID-19. Some of the financial support opportunities include waiving late fees and allowing for a grace period on payments that are due. If you’re interested in taking advantage of or learning more about these financial breaks, please check in with your insurance carrier or give your Morse Insurance Account Manager a call for more information.

Morse, of course, is committed to supporting you and your business during this difficult time. In addition to providing you with kindness and compassion as we navigate these uncharted waters together, we’re equally committed to sharing essential information and answers to your business insurance-related questions. In our upcoming blog posts, Morse is investigating small business financial assistance programs and loans, including the Small Business Administration Injury Disaster Loan (EIDL) program for COVID-19, and how the community can support local businesses during the pandemic.

If you have any questions, concerns, or need support with an insurance transaction, please give us a call, follow us on Facebook, or send us an email. Physically, we may be apart, but Morse, of course, is still here and happy to help.