With the evolving and significant changes happening in the world around the
coronavirus and its impact on commercial insureds, we have received a number of
questions from our clients regarding business income coverage.
Designed to protect a business in the event of an interruption in operations caused
by a physical loss that results in financial downturn, business income coverage
serves to cover the period of time it takes to rebuild, repair or replace damaged
property. Requirements for the coverage to trigger vary across insurance carriers.
Additionally, each state has its own department of insurance that governs what is
acceptable insurance language which can cause variations from state to state.
Most insurance companies policy forms incorporate approved Insurance Services
Office (ISO) policy terms and conditions. Following ISO, the business income
insuring agreement requires a covered cause of loss that causes direct
physical loss of, or damage to, the property at the described premises. The
cause of loss must also cause a necessary interruption of operations that results in
business income loss.
Without a direct physical loss, business income coverage will not be triggered.
There will also not be a period of restoration of property to determine business
In addition to the terms of business income coverage, policies include Exclusion of
Loss Due To Virus or Bacteria (form numbers CP0140 or CP7140), which exclude
commercial property losses resulting from any virus, bacterium or other microorganism
that induces or is capable of inducing physical distress, illness or disease. Form number CP0140 is found on newer Insurance policies. Form number CP7140 appears on older policies. These endorsements have been used since they were issued and filed by ISO several years ago.
With any claim, policy wording and the specific trigger driving losses determine the applicability of coverage. If a formal property business income claim is filed, it will be adjusted on the applicable policy wording and specific details driving the loss. Theodore & Associates is committed to supporting you through the challenges of the coronavirus. We will continue to monitor the evolving situation and work with you through this uncertain time.
With continued flight cancellations and imposed travel restrictions, it's important to know what travel insurance covers.
As reported cases of coronavirus increase, the outbreak is stoking fears among travelers.
Several countries, including the U.S., have imposed travel restrictions that include quarantines to contain the virus. At least 73 airlines have canceled or limited flights to China. And now cruise lines have begun to take notice following a recent outbreak on a ship in Japan.
Given these developments, consumers may be wondering whether travel insurance will protect them in case they cancel their trip, become sick while abroad, or if their flight is grounded.
But consumers need to understand that their travel policy doesn’t protect them from everything. So it helps to find out ahead of time what is and isn’t covered.
Cancellation coverage? Don’t count on it
Tour operators and travel insurance brokers are reporting an increasing number of requests from customers asking to change their travel plans. Meanwhile, many U.S. airlines, including United, America and Delta, have canceled several flights to China.
Consumers may be surprised to learn that in either situation, their travel policy probably wouldn’t cover them.
Most travel insurance is designed to protect you in case you need to cancel a trip, lose belongings, or require medical attention. But for cancellations related to coronavirus, only certain reasons qualify. Here’s a breakdown.
Airline cancels flight: Not usually covered
Reimbursing a canceled flight is generally the responsibility of the airline — not the insurer. The same goes for cruise lines, rail companies, or any other transportation provider that cancels because of coronavirus or any other reason.
That doesn’t necessarily mean the transportation provider will cover all expenses. Airlines, for example, are not required to refund canceled flights and may limit the extent of the reimbursement. Fare policies vary, so it’s a good idea for travelers to review them before booking a flight.
Traveler chooses to cancel a trip: Not covered
Travel insurance will cover consumers who have to cancel their trip for reasons including adverse weather, a natural disaster, jury duty, an act of terrorism, or the travel company going out of business. But it won’t protect travelers who cancel because they are worried about the coronavirus.
Traveler contracts coronavirus and has to cancel: Covered
Travelers are protected if they have to cancel a trip because of personal sickness or injury, or the sickness, injury or death of an immediate family member.
Most standard policies will cover cancellation or interruption if the traveler is placed under quarantine, or if the destination is placed under a mandatory evacuation.
Although standard policies don’t cover all cancellations, some travel policies offer “cancel any reason” provisions or flight delay benefits that will provide reimbursement. Again, here’s where reading the fine print comes in.
Illness protection — it’s in the details
The good news for consumers is that most policies protect travelers who become sick while abroad. But the details of the policy matter.
Travel insurance is intended to cover medical costs abroad. As long as the policy includes medical coverage, the traveler is protected should he or she require medical care, hospitalization, or a medical evacuation while in a foreign country.
But travelers need to understand the stipulations of their policy from the outset. Here are some considerations:
Primary or secondary payer?
A secondary payment policy is designed to pay for costs that the traveler’s personal insurance does not cover. This may mean the traveler has to pay deductibles and co-pays out of pocket. A primary payment policy, however, serves as the first payer for any medical costs that arise.
All policies have a maximum they will pay, and many also have deductibles and other limitations.
Policies may exclude coverage for certain situations, such as risky activities. So thrill-seekers like skydivers and bungee jumpers might be out of luck.
A separate health policy, or rider, may be helpful for covering things a standard policy might exclude (like that skydiving expedition). A traveler may be able to purchase a rider to extend coverage in case of injury. A rider for foreign medical care coverage might also be useful, although those types of provisions are rare.
In most cases, a standard travel policy is sufficient. There are several types of policies with different levels and coverage for all sorts of travel. Some policies may be specific to cruises, where it may become critical to evacuate to a hospital. Other policies are geared more toward adventure travel.
Riders are meant to provide coverage that’s missing from a primary policy. So if a policy excludes coverage for dangerous activities such as bungee jumping, a traveler may be able to purchase a rider to extend coverage in case of injury.
The headlines may paint a scary picture of the coronavirus, but it helps for U.S. travelers to keep facts and figures in perspective.
As of Feb 25, 2020, there have been more than 80,000 confirmed cases of coronavirus, according to the World Health Organization. Of those, 77,780 were reported in China, where the outbreak originated.
And although some U.S. airlines have canceled flights, bear in mind that almost all of these cancellations involve flights to and from China. The U.S. has temporarily barred entry for anyone traveling from China who isn’t a U.S. citizen, permanent resident or immediate family member of either.
Travelers planning a trip to the Western Pacific region may want to give more thought to their insurance coverage. For travelers who are headed anywhere else in the world, chances are they’ll be in good shape with a standard policy.
The key is for travelers to determine their actual risk, understand what they are trying to cover, and then find a policy that accomplishes that.