🔒Will your insurance cover coronavirus-related losses, lawsuits?

The coronavirus pandemic has had a significant financial impact on businesses in all industries that is likely to continue for an uncertain period of time.

Many businesses have closed or limited their operations due to the virus and restrictions imposed by governmental authorities.

It is also inevitable that there will be securities liability lawsuits filed against companies for losses alleged to have been suffered by a third party due to misleading or inaccurate financial reporting, or alleged improper management or decisions made by corporate officers or directors, as well as liability claims against healthcare providers and businesses for negligence or other wrongful acts that allegedly cause bodily injury or property damage.

Businesses must understand their insurance portfolio to determine whether they are protected for such claims or losses.

Some insurance policies that may protect a business from coronavirus-linked litigation include:

Business interruption insurance: Commercial policies generally include business interruption coverage that indemnifies a business for losses sustained due to an interruption in operations.

Coverage under such policies could include civil authority coverage, which may protect a business in the event of an interruption caused by government orders that impair or prohibit access to a company’s property.

Business interruption policies protect the insured from losses caused by an interruption to business of suppliers or distributors in its supply chain.

Business interruption coverage generally requires that there be physical loss or damage to the insured or supplier’s property.

Additionally, these types of policies may contain coverage exclusions for viruses, although some states have begun to address this issue.

As an example, the New Jersey legislature introduced legislation on March 16, to force insurers to include coverage for business interruption due to the coronavirus pandemic.

Event cancellation insurance: Numerous events have been cancelled due to coronavirus fears, impacting hospitality, travel and retail businesses.

Event cancellation insurance policies provide coverage for losses arising from events that are cancelled due to circumstances outside of the insured’s control, including cancellations due to government order.

Coverage may apply for cancellation of an event, as well as for events that started but did not finish, and events that continued but not at the level of attendance expected due to the coronavirus.

Coverage may also exist for events that are postponed or relocated.

Directors and officers insurance: D&O insurance policies protect officers, directors and businesses from liability for wrongful acts, including various breaches of duties, that cause economic loss to a third party.

These policies apply to shareholder lawsuits against corporations.

There likely will be numerous shareholder and securities lawsuits filed as a result of the stock market slide due to concerns over the coronavirus.

Commercial general liability and errors and omissions coverage: Commercial general liability insurance policies protect businesses against losses for claims filed for bodily injury or property damage caused by an accident.

Errors and omissions insurance generally covers professionals for claims alleging negligence in the provision of professional services, including health care and convalescent care.

Claims filed against a nursing home, hospital or medical professional for coronavirus-related injuries may trigger coverage under these policies.

Michael McCormack is an attorney and shareholder at Wethersfield-based law firm O’Sullivan McCormack Jensen & Bliss PC.