As soon as the pandemic was announced, insurance companies released press releases detailing how property insurance policies would not provide coverage, even before policyholders were able to submit any claims. However, if you are a policyholder, you should take a deeper look at your policy and insist on coverage where appropriate.
Take a look at the property damage “trigger,” the existence and terms of any additional coverage extensions and the terms and structure of any exclusions that your insurer might want to apply. There may be hidden coverage within.
The Trigger is the physical loss or damage to property. Commercial property insurance usually covers this. Business interruption coverage is usually dependent on a finding of physical loss or damage. In our case right now, the pandemic has caused a sudden business interruption among many. “Physical loss or damage” doesn’t necessarily have to include actual physical damage from a fire or earthquake.
A biological destroyer such as COVID-19 does qualify because it may result in physical loss or damage to property. Because the virus lingers on surfaces, this means your property is essentially damaged. Just because you can’t see the invisible menace, doesn’t mean it doesn’t equate to the destruction of any other natural force on the planet that can result in physical injury or death.
Courts have settled on the fact that a contamination is basically a form of physical loss or damage if it impairs the use of the insured property. One federal court detailed: “The majority of cases appear to support the position that physical damage to the property is not necessary, at least where the building in question has been rendered unusable by physical forces.” TRAVIS ins Co. v. Ward.
One such example is that of Port Authority of New York & New Jersey v. Affiliated FM Insurance Co. In this case, a federal appeals court decided that an asbestos-infected building experienced physical loss or damage. This was the “trigger” for property damage.
COVID-19 is indeed an imminent threat and can result in a total shutdown of your facilities and the death of your employees. Such a grim statement should shed light on how this virus can be more threatening than any other natural disaster. It’s important to look at the fine print and seek out these hidden points of logic within complicated policies. And of course, never do it alone. The insurance specialists will be able to pinpoint these hidden coverages.