Measures put in place to reduce the spread of COVID-19 are wreaking havoc upon businesses throughout the country. When looking for a way to soften the economic blow of recent closures and restrictions, businesses should consider reviewing their insurance policies to see if they have coverage for the losses they have sustained.  While the answers to these questions depend on the language of each insurance policy, we hope this guide sheds some light on avenues for recovery.

  • Do I Have Coverage for My Losses From COVID-19? The answer will depend on the language contained in your insurance policies. There is no uniform rule for which type of policy covers these losses. Some policies contain Business Interruption Coverage or Civil Authority Coverage which apply to losses sustained as a result of closure orders issued by the government—such as the recent orders restricting access to restaurants, bars, and other public establishments. Attorneys with experience in insurance coverage may be able to help navigate these issues. 
  • What Is Business Interruption (BI) Coverage and Do I Have It? BI Coverage is generally intended to cover losses from interruptions to a company’s operations, including lost revenues and other expenses such as payroll.  BI Coverage is often provided in a separate form and has its own policy limit and deductible. A review of your policy will help determine whether you have it.
  • Is Business Interruption Coverage the Only Way to Recover the Losses Incurred From COVID-19? Other types of insurance exist that could possibly extend to COVID-19 losses. Some policies provide Civil Authority Coverage. Civil Authority Coverage applies in situations where access to an insured’s property is prevented or prohibited by a government order issued as a result of physical damage. Some policies may have other applicable coverage forms such as Extra Expense and Dependent Property. Some policies may even have Virus or Pandemic Coverage.
  • Am I Covered If My Policy Says I Have Business Interruption or Civil Authority Coverage?
    These coverages often
    require the loss be caused by “direct physical loss of or damage to” the business premises. Insurance companies are wrongly claiming that COVID-19 has not caused “physical damage.” But under California Law (and in many other states), coverage provisions are interpreted broadly and in favor of the insured. An order requiring you to close your business to the public may constitute a “direct physical loss of” the premises.  Additionally, Kabateck LLP has been working closely with local and state government officials to include language in their orders specifying “that the presence of COVID-19 causes property damage.” This language will increase the likelihood of establishing coverage. We have had a very positive response. 
  • What If My Policy Has A “Virus Exclusion”? Some policies contain an exclusion for losses “caused by” a virus. But these exclusions are not absolute.  Under California Law, the insurance company has the burden to establish that an exclusion applies.  Exclusions must be conspicuous, plain, and clear, and are interpreted narrowly, and against the insurance company.  Unless your property was closed due to contamination, there is a strong argument that your losses are not “caused by the virus, but rather caused by the government’s orders.
  • Should I Contact My Insurance Company to Make A Claim? Not yet. You should speak with an attorney before contacting your insurance company about COVID-19 losses. You will need to be prepared for how to report the claim. When you report a claim, the people on the other end of the line are using scripts to question you which lead you to answers which result in no coverage. The coverage needed in this situation is far too complicated to navigate on your own without first being informed. Consult with an attorney before you make a claim.
  • What Should I Do Next? If your business has suffered losses or continues to incur expenses due to the COVID-19 pandemic, you should speak with an attorney who understands insurance coverage. Here are some additional tips to keep in mind:
    • Get a copy of all of your policies. Many people often assume the “declarations page” which lists the policy limits is their policy. It is not. And you may have more that one applicable policy. Contact your broker, agent, or salesperson, and request that they immediately email you a copy of all of your policies.
    • Do not rely on coverage opinions from your broker or agent. Insurance brokers or agents often incorrectly tell you that your losses are not covered. They are the insurance company’s “first line of defense” against you. Do not rely on what they tell you.
    • Maintain records of your losses and expenses. Make sure you maintain accurate records of your losses, operations, schedule, payroll, and expenses you’ve incurred before and after the start of this crisis. You will need to prove your losses.
    • Document your communications with the insurance company. Insurance adjusters might say something favorable over the phone but fail to follow through. If you are already been in touch with your insurance company, keep a log of your communications.
    • Focus on your operation. Do whatever you can to ensure continued operation of your business and the health and well-being of your employees. We must stay positive.

For more information, or if you have any questions, feel free to contact us.


Please fill out this form if you would like us to review your insurance policy to determine whether coverage exists.

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