This 2-part video series addresses the question of coverage under standardized business income and extra expense coverage forms for COVID-19. As has been widely discussed in the insurance trade journals, the standardized property insurance contract language clearly states that “direct physical loss or damage to COVERED PROPERTY” followed by the “Virus” exclusion, communicable disease exclusion, ordinance or law exclusion, and pollution exclusion has limited potential coverage for COVID-19 damage to property, business income and extra expense. This requirement with the attached peril exclusions are serious hurdles to the availability of coverage under most standardized property coverage forms. There is a huge disconnect between reality and perception by many insureds concerning coverage.
Most insureds argue that they have a reasonable expectation that coverage will apply even though they have not read their insurance contracts. The misconception revolves around the names of coverage – Business Interruption versus Business Income with Extra Expense. Unfortunately, most standardized insurance contracts are business income coverage forms or time element coverage forms. The archaic language of Business Interruption does not apply for most insureds and the expectation that a business entity that is subject to an interruption by civil authority should have coverage. The current standardized business income and extra expense coverage forms have clear and concise coverage grants and definitions that do not make the insurance contract ambiguous. Therefore, the coverage terms, limitations, extensions, conditions, and exclusions will apply, and they generally do not support the expectations of coverage by insureds.
Part One: 32:56
Part Two: 39:39
