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COVID-19 & Business Interruption

Business Interruption coverage is optional coverage that may be purchased as part of a Commercial Package Policy, a Business Owners Policy (BOP), or as a standalone policy.

Business Interruption coverage usually will provide for loss of net income, as defined by the policy, and extra expenses incurred to return your business to normal operation. Business Interruption coverage may be covered on an “all risk” basis subject to exclusions or it may specifically list types of perils or causes of loss it covers.

Business Interruption coverage is typically triggered if you have direct physical loss to covered property that leads to the business interruption – for example, a fire at your location that has caused you to suspend your business activities.

Business Interruption coverage is usually an optional coverage. You will need to consult your policy to see if you purchased this coverage. The Department of Insurance strongly encourages businesses to review their policies, including the conditions, exclusions, coverage limits, and applicable deductibles, with their insurance agent or company to determine what their policies cover. Each insurance policy is different, and the coverage varies.

No. Business interruption coverages in commercial property and business owner policies contain different terms and conditions impacting how business interruption will be covered, what will be excluded, and how endorsements might alter the coverage in the base policy form. Because the terms and conditions are worded differently among insurers, it is critical for all business owners to read the specific terms and conditions set forth in their policies.

You would need to consult your policy to determine what is covered, but in general, Business Interruption coverage requires a direct physical loss or damage to covered property caused by a covered peril (i.e. fire, water damage, etc.) in order to trigger the coverage.

 

In some cases, business interruption coverage contains a “civil authority” clause. Like other business interruption coverage, this clause may require physical damage to property caused by a covered peril, but not necessarily the insured’s property or at the insured location. Dependent on the specifics of a given policyholder’s situation and policy language, there may be coverage for closure of the business because of an action by a governmental entity (a “civil authority”) because of health and safety concerns, so long as the covered physical loss or damage has occurred.

File a claim with your insurance company. Your insurance company will either accept the claim or deny it. If, after reviewing your policy and consulting with your insurance agent and/or legal counsel, you believe you have been improperly denied Business Interruption coverage by your insurance company, you can file a complaint with the Department.  If you have questions before filing a complaint, please call Consumer Affairs at (208) 334-4319 or toll free from and Idaho number (800) 721-3272.

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