Broker Check

Another Obstacle to COVID-19 Coverage

May 21, 2020

An article by Christopher J. Boggs in Insurance Journal "Business Income, COVID-19, and Plaintiff Attorneys; They Keep Trying" cites the common reasons, such as need for physical damage and virus exclusion, to explain why most Property policies will not cover claims for business interruption because of government shutdown. However, he also mentions an additional exclusion: the government order itself.

Since the 1980s, standard property cause of loss forms have excluded "acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body". While this exclusion is somewhat awkwardly written ("governmental body" should be first rather than last) it is clear that an order by a governor or other official shutting down non-essential businesses is an excluded act or decision.

Unless a policy is manuscripted leaving out this exclusion, it is difficult to argue that claims due to a government shutdown are covered.