Insurance Coverage for Losses Stemming from the Coronavirus

Policyholder Advisor & Alert

PUBLISHED ON: February 12, 2020

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The coronavirus has not only sickened tens of thousands of people, killed several hundred, and disrupted life for millions, but has also sharply impacted the second-largest economy in the world. Many Chinese companies have suspended operations, and international companies like Starbucks, Apple, McDonalds, KFC, and Pizza Hut have closed their stores in Wuhan and elsewhere. Disney has closed its parks in Shanghai and Hong Kong. Luxury brands have seen their stocks fall. Tesla and other companies have suspended operations. Companies that do not have operations in the geographic areas that are most acutely affected by the outbreak but depend on businesses in those areas as part of their supply chain are also impacted.

Businesses should evaluate whether and how their operations and revenue may be affected by the coronavirus and then closely analyze whether existing insurance policies potentially provide coverage for the losses.

Business Interruption & Contingent Business Interruption Coverage

Standard property insurance policies usually include two types of valuable coverage for disruptions like the coronavirus. Business interruption
coverage insures against losses resulting when the policyholder’s operations are directly affected; and contingent business interruption coverage insures against the risk of indirect losses, such as when suppliers or customers are affected.....