COVID-19 and Business Interruption Insurance
In order for Business Interruption coverage to respond, there must be direct physical loss or damage to the insured building and/or its contents or its equipment by an insured peril, such as fire, wind, or falling object, for example. Business Interruption cannot be activated on its own – a slowdown in business, closure, quarantine, etc. do not cause a direct physical loss or damage to insured property. Likewise, a virus, COVID-19 in this case, does not cause any direct physical loss or damage either.
An extension in policy wordings called “interruption by civil authority,” does exist, but refers to bodily injury or property damage to a neighbouring or adjacent property where the business is closed by order or civil authority for clean-up, investigation, etc.
It is hopeful that small business will be able to re-coup some of their loss from special government programs put in effect in response to the COVID-19 outbreak. The IBC and the Canadian Government have put together several resources regarding COVID-19. Information can be found under the following links: COVID-19 and business insurance: How coverage is triggered
Coronavirus disease (COVID-19):Resources for Canadian businesses