Business Interruption Insurance and How it Applies During COVID-19

Business Interruption insurance is typically triggered when a Property Damage loss leads to a drop in revenue or additional expenses. If the business’s ability to generate revenue is negatively impacted by the loss, or they incur additional expenses (i.e. move to a new location, temporary costs to supplement loss of machinery, etc.) the Business Interruption section will come into effect.

Most commercial property policies provide an element of cover for business interruption that is caused by an infectious or contagious disease. However, there is no cover for any disease declared to be a “quarantinable disease” under the Quarantine Act 1908, and/or falls into the Biosecurity Act 2015. This link to the Department of Health provides a list of human diseases noted under the Biosecurity Act.

If the infectious or contagious disease does not fall into the above, each insurer will still have specific criteria that need to be met. We have summarised these criteria below, but each insurer will be a little different.

• a Government Authority ordering closure of a location due to unsanitary conditions;
• an outbreak of an infection or contagious human disease occurring within a radius the insured location (usually 20km);
• a result of injury, illness or disease caused by consumption of food or drink supplied from the contaminated location; or
• the result of a murder or suicide at the location.

Each policy wording must be checked on a case by case basis, however almost all will exclude any claim made as a result of COVID-19 impacting a business operation.