By Maureen M. McBride

If you are a small business owner wondering whether your business income or business interruption insurance policy will help ease your company’s pain during the coronavirus outbreak, the answer, unfortunately, is probably no.

Let’s start with the basics. If you don’t have business interruption insurance, you can’t purchase it now. Just like you can’t buy collision insurance after an accident, you can’t purchase business interruption insurance to cover a pre-existing business loss.

Moreover, even if you have business interruption insurance, chances are that it won’t cover business losses stemming from the coronavirus crisis. That’s because loss of business income is part of a property policy that covers you for loss of income resulting from a covered loss.

A covered loss is generally a loss resulting from fire or other physical damage to the property.  In those specific circumstances, subject to any exclusions, the policy will reimburse you for lost income at the level set forth in the policy.

There is also another important reason why your losses from the coronavirus crisis likely will not be covered. That is because most business income or business interruption insurance policies do not cover income loss from a “virus, bacterium, or other microorganism.”

This is true even if you had to shut your business down because someone on your premises tested positive for COVID-19. While some may debate the issue, it is doubtful that presence of a virus in your building will be considered “physical damage” to your property.

Finally, it is unlikely that business interruption insurance will cover your losses even if the government shuts your business. That is because most policies do not cover losses that occur when a “civil authority” (any branch of federal, state, or local government) forces a business to temporarily close.

The bottom line is this: while all policies are different and must be read carefully to determine the amount and scope of coverage, as a general matter, business interruption insurance likely will not cover your losses from the coronavirus.

As a result, you’ll likely have to look for other sources (disaster relief packages, small business loans, etc.) to sustain your business during these difficult times.

If you have questions about insurance, employee issues, small business loans and the like, Lamb McErlane PC can help. Contact us at 610-430-8000. www.lambmcerlane.com.

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At Lamb McErlane PC, Maureen M. McBride concentrates her practice on commercial litigation and appellate law. She is a partner and co-chair of Lamb McErlane’s Appellate Department, a member of the Litigation Department and the Firm’s Executive Committee. mmcbride@lambmcerlane.com.