Any form of business insurance is designed to aid business owners should an unforeseen major catastrophe take place. Smart entrepreneurs pay monthly premiums to ensure their business will be protected from possible damages, injury claims, and business interruptions that could potentially wipe out their profits and lead to bankruptcy.
Then out of the blue, the COVID-19 pandemic happened.
Never in our wildest dreams did we expect that a virus, a microscopic entity, can be vast enough to make the entire world fall on its knees. To contain the spread of the virus, businesses, especially the non-essential industries, are forced to shut down their operations.
More than ever now is the ideal time for businesses to claim such financial assistance. The question is, will their insurance policy be able to cover business losses due to COVID-19? Do insurers consider the virus to be “physical damage”?
If you’re a business owner, who’s been hit hard by this pandemic, and you have business insurance, here are 5 things you can do to see if you’re covered.
1. Talk to your insurer
From commercial property Insurance to business insurance, there are many insurance policies and endorsements that cover losses due to business disruption. The question is, whether or not, your insurer considers the virus to be “physical damage”.
Don’t assume that you’re covered just because you have an all-risk policy. The first step is to speak with your insurer and ask about the scope and limitations of your policy.
2. Go back to your business insurance policy
Request (in writing) a certified copy of your insurance policy from your business insurance brokers or insurance company. The one you have right now is likely a partial policy. Make sure you obtain a complete copy of your policies, including the endorsements. It will include every single clause, inclusion, exception, and provision.
3. Dig into the fine print
Reading the fine print isn’t fun, but it would help you determine your COVID-19 related claims. Once you’ve received the complete policy, find this key phrase: “cause of loss to trigger coverage.”
Then, see if your policy has the following coverages – and for how long
- Business interruption insurance – designed to cover the loss of income that a business suffers after a disaster.
- Contingent business interruption – designed to provide financial assistance when the loss of primary supplier, customer, or partner, affects your ability to operate.
- Contingent extra expense – designed for reimbursing lost profits and expenses associated with an interruption of business at the customer’s or supplier’s premises.
- Ingress/Egress – designed to pay for the loss of income triggered by physical loss or damage caused by a covered peril to third-party property that prevents or hinders ingress to or egress from the insured’s business
- Civil authority clause – an insurance policy provision that outlines how the loss of business income coverage applies when a government entity hinders or denies access to the insured property. The “stay at home” government policy, which impacts your business operations, count.
- Ordinary payroll – the total amount of payroll expenses for all the employees of an insured business.
- An extended period of indemnity – an endorsement under a business interruption policy for the loss of income suffered during a specific period after the damaged property has been repaired.
Ask about these coverages and confirm if they apply to the crisis at hand.
4. Seek professional advice
Do you work with a professional business insurance agent or financial advisor? They’re the best resource when you’re looking for a concrete explanation and solid advice.
It’s also suggested to stay tuned in the latest news associated with insurance companies and their provisions. Additionally, stay updated with how your government, banks, and other financial institutions, can assist in alleviating the impact of this pandemic.
5. Find other ways to fund your business
Assume the worst: your insurance policy cannot help you in any way. How is your business going to cope and thrive during the crisis?
The best way to fund your business is to seek help from the government. Governments all over the world have already put initiatives to support struggling small business owners and their employees. They are providing financial assistance and packages to help stave off economic collapse in the country.
Also, if you handle essential goods and services (groceries, restaurants, drugstores), there are several things you can do to survive the COVID-19 pandemic. That includes making a three-month financial plan, strengthening your delivery services (if applicable), and shifting your strategy online.
Author Bio: Carmina Natividad is one of the daytime writers for Insurance Advisernet, one of the largest and most reliable general insurance businesses in Australia, providing high-quality risk management advice for business owners. She enjoys writing practical tips and tricks, making complex finance and business topics easier to digest.