known as “business income” coverage among insurance professionals. Both terms, sharing the same initials, are used as shorthand for indicating coverage for two types of losses: 1. loss of revenue during the period when an operation is completely or partially suspended; and 2. extra expenses incurred to get the operation back up to full capacity. While media reports may refer to business interruption “policies,” BI coverage is most often provided as an “endorsement,” or “coverage part,” added to a commercial property insurance policy. BI coverage is also built into most “businessowners,” or “BOP,” policies that provide property and liability insurance for small businesses in a single policy. To understand why insurance companies are taking a different coverage position to affected businesses for PAG E 2 Human Hurricanes Why Insurers May Treat Riot Claims Different Than Pandemic Claims Continued losses due to the pandemic than losses in the wake of civil disturbances, one needs to understand the idea of a “covered cause of loss,” also known as a “peril insured against.” As its name suggests, a “named perils” property insurance policy provides coverage for losses due to the causes of loss (“perils”) specifically identified (named) in the policy. Named perils policies can be identified as “basic,”“broad,” or some other name, depending on the number and range of perils covered. As a contrast, an “open perils” policy (called a “special” form by insurers) covers any type of loss to property except for causes explicitly excluded from coverage. Flood, earthquake, and war are among the commonly excluded causes of loss. Necessary conditions For BI coverage to be triggered, several conditions are almost always required: • There must be “direct physical loss or damage” to property at an insured location; • The loss or damage must have been caused by a covered cause or loss; and • The loss or damage must be the reason for the suspension of operations. PROTECTING YOUR PROPERTY ® 800.382.2468 | AdjustersInternational.com Sheila E. Salvatore, Editor | Editor@AdjustersInternational.com | 126 Business Park Drive | Utica, NY 13502 Copyright © 2020 Rising Phoenix Holdings Corporation. All Rights Reserved. E01-1020-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.
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