Navigating Commercial Insurance in the Age of Pandemics: What You Need to Know

Understanding Commercial Property Insurance in Disease Outbreaks

Commercial property policies typically do not cover losses resulting from disease outbreaks. Standard policies require property damage for coverage, which a disease outbreak might not necessarily cause. However, specialized insurance like 'supply chain risk insurance' can cover business interruption without requiring property damage. For instance, if a factory's supplier shuts down due to a disease outbreak, the factory could be covered for lost income.

Business Interruption and Contingent Coverage

Business interruption coverage, which compensates for lost income and extra expenses, generally does not extend to disease outbreaks. Similarly, contingent business interruption coverage, which covers losses from a supplier or customer's covered loss, also typically requires property damage. However, endorsements can be added to extend coverage, such as during the 2014 Ebola outbreak, where ISO released specific endorsements for business interruption due to government-ordered shutdowns.

Commercial General Liability and Environmental Insurance

Commercial general liability policies may cover liability for spreading a disease, but often include pollution exclusions that could affect coverage. Environmental insurance, which offers pollution coverage excluded from standard policies, might provide some protection, depending on the policy's definitions. For example, some policies specifically cover damage from Legionella bacteria.

In light of recent events, it's crucial for businesses to understand their insurance policies and consider specialized coverage options. Consulting with an insurance agent or broker can help tailor coverage to specific needs, ensuring protection against unforeseen events like disease outbreaks.