PAGE 3 PROTECTING YOUR PROPERTY ® 800.858.3900 | ggg-ai.com Sheila E. Salvatore, Editor | Editor@AdjustersInternational.com Copyright © 2020 Adjusters International, Ltd. All Rights Reserved. E08-1020-V1 Insights for Your Industry® is published as a public service by Adjusters International, Ltd. It is provided for general information and is not intended to replace professional insurance, legal and/or financial advice for specific cases. In the case of the coronavirus, insurers have taken the position that infection by a virus does not constitute direct damage to property. Moreover, since the “SARS” virus outbreak of the early 2000s, property insurers have implemented provisions explicitly excluding coverage for losses arising from viruses. As this is written in June 2020, insurers’ positions are being challenged in federal and state courts, especially since public authorities ordered businesses to close as the pandemic first flared in the U.S. Claimants argue that BI insurance is supposed to respond when civil authorities close off an area. That’s generally true, but only if the order results from damage to a property (not necessarily the insured’s property) caused by a peril covered under the insured’s policy. Again, the presence of a virus, or of an order prompted by a virus, did not qualify, according to insurers. It should be noted that claims professionals, attorneys and government entities are all actively challenging this position. Rampage coverage When communities erupted in anger and anguish in late May and early June of 2020, observers went to great pains to distinguish between peaceful demonstrators and those who violently attacked property. That’s not necessary for insurance purposes, however, as losses due to “riot and civil commotion,” as well as vandalism and burglary, are covered under nearly all commercial property insurance policies, including BOPs. Those four terms, along with fire, are listed as covered causes of loss in a “broad” named perils form, and not excluded (hence covered) in a “special” (open) perils forms. Because damage from fire, burglary, vandalism, riots, and civil commotion is typically covered, BI coverage is usually triggered during a suspension of operations due to such losses (presuming BI coverage has been purchased). Even if an insured has not sustained damage itself, it would be eligible for BI coverage if civil authorities order a shut down because of such damage at another location. None of this is to suggest that recovery from the 2020 disturbances will be simple. In addition to the particular factors to a claim, policyholders and insurance claim adjusters will face this central question: What will be the basis for determining what insureds recover for business income loss? Will it be the amount ChristopherV.Jones/Shutterstock.com Human Hurricanes Why Insurers May Treat Riot Claims Different Than Pandemic Claims Continued
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