Earlier last week, Hunton insurance partner Michael Levine spoke with Business Insurance about the mounting concerns over insuring Coronavirus-related business income and supply chain losses. As of today, almost 80,000 cases have been reported world-wide and more than 2,250 are confirmed to have died as a result of the disease. Companies across the globe have been impacted, with loss of materials, markets and distribution representing a common thread among reported losses and disruptions. But these “supply chain” losses may be compensable through insurance. Policyholders will be forced to evaluate complex policy provisions and endorsements to ascertain whether their insurance program should respond. In particular, policyholders must determine whether their policy wording requires some element of physical loss or damage to property to trigger business interruption or contingent business interruption coverage. Even where such a requirement exists, however, some policies are written so that loss of use of property is sufficient to implicate coverage. Likewise, questions exist concerning contamination to property, and whether that too may constitute physical loss, damage or loss of use. For these reasons, among others, Levine explained to Business Insurance that “contingent business interruption . . . is going to be one of the battlegrounds, if not the main battleground, particularly in the supply chain area.” Levine further noted that claims could be complicated by the physical damage requirement.
All told, policyholders experience actual or potential loss resulting from Coronavirus interruptions should consider all available lines of insurance and contractual indemnification, including insurance issued to others, such as suppliers, distributors and retailers. Indemnity agreements, in particular, can be very valuable in this instance, since those agreements likely do not include a physical loss or damage component.
A copy of the Business Insurance article containing Levine’s comments can be found here.