An immediate problem for many businesses as the coronavirus pandemic gathers force is the suspension or interruption of operations. While we usually think of property policies as applying to hazards like fires or storms, a range of property policies and coverages can also be triggered by loss of use, quarantine, and other interruptions to business resulting from this national public health crisis. This is a particular problem in the construction industry, where the impact of the pandemic may lead to expensive delays in completion because of site
shutdown, access restrictions, or supply-related issues.
Commercial property policies typically apply to existing structures, while builders risk policies apply to property in the course of construction. There is some overlap, but this is the basic distinction between the two policy types.
Business Interruption Coverage
One of the widely used commercial property insurance policy forms addresses business interruption as follows:
We will pay for the actual loss of Business Income you sustain due to the necessary “suspension” of your “operations” during the “period of restoration.” The “suspension” must be caused by direct physical loss of or damage to property at premises which are described in the Declaration. The question this presents is whether and how the COVID...