Traditionally, businesses in central Pennsylvania have turned to their insurance when a man-made or natural disaster such as a fire or storm causes them to shut their doors. In 2020, businesses are dealing with a new threat in the form of forced shutdowns caused by the COVID-19 pandemic.
What Is Business Interruption Coverage?
Business interruption coverage is a type of insurance for being forced to close due to direct physical damage or losses. After covered events, such as lightning strikes, this type of policy can replace lost income, taxes, mortgage or lease payments, loan payments, payroll and operating expenses. It can even pay for relocation to a temporary office or company space.
Some all-risk policies also cover interruptions caused by damage to a nearby business. For example, if the shop next door has a gas leak and authorities force you to evacuate, your policy may cover lost income due to the evacuation and shutdown, though this is rare.
The goal of business interruption coverage is to help companies keep their doors open even when disaster strikes. Many companies have considerable overhead expenses and may have to pay for equipment. An insurance policy helps continue to pay for the essentials until a business can start being profitable again.
An interruption to sales and services can last for months after a serious disaster. While some owners may be able to keep a company afloat for a few days or weeks, a few months will generally close a business’s doors without interruption coverage.
Are Pandemics Covered by Business Interruption Insurance?
Right now, business expense coverage during a shutdown is crucial for companies since many Pennsylvania enterprises have faced government-mandated closures. On March 19, 2020 Governor Tom Wolf ordered all nonessential businesses in the state to close from March 21 onward. On April 1, the Governor ordered a stay-at-home order for Pennsylvania.
While nonessential businesses were allowed to gradually reopen during June and July, certain government-mandated restrictions remained in place. Restaurants in Pennsylvania were ordered to operate at 25% capacity and telework was encouraged. Many companies had to purchase personal protective equipment for workers and patrons.
As a result of these rules, many companies lost money and sought compensation from insurance coverage. Unfortunately, business interruption coverage specifically excludes damages related to virus and bacteria outbreaks. Even the most robust policies do not allow company owners to recover such losses.
Get Business Interruption Coverage for Other Emergencies
While business interruption insurance does not cover COVID-19, relief is available for businesses affected by the closures. Additionally, some lawmakers are seeking to have insurance rules changed to better protect companies, although we do not know what this protection may look like in the future.
For many, the shutdown has highlighted the value of coverage that steps in when your company can’t operate. If you need a robust business insurance policy, get a quote from Strock Insurance. We’ve been providing peace of mind to Camp Hill, Harrisburg and other local business owners since 1983. We’re committed to helping you find the right policy to protect the enterprise you have worked hard to build.
