HIG Insurance Explains Common Insurance Coverages for Small Businesses and How They May Respond to a Virus-Related Claim.

With Massachusetts Governor Baker and Rhode Island Governor Raimondo’s recent executive orders for all non-essential businesses to temporarily close their brick-and-mortar facilities, small businesses throughout the region are being financially impacted.

During this uncertain and unprecedented time, many business owners are left with more questions than answers. Unfortunately, this likely won’t change anytime soon.

As the COVID-19 outbreak continues to develop, our team is unable to speak directly to how business insurance policies will respond to a claim, and we would urge you to be wary of any agent who suggests otherwise.

However, there are three things we can share with you at this time.

  1. The information we have learned from our trusted business insurance partners thus far.
  2. A sampling of answers that we’ve provided to our small business clients in the past.
  3. A clear and easy-to-understand explanation on what a Business Owners Policy, or BOP, is and how it typically responds to a virus or bacteria-related loss.

It is essential to note that no two commercial insurance policies or insurance carriers are alike. Therefore, the information we are sharing throughout this post is extremely general in nature. If you would like to speak to one of our account representatives about your BOP or commercial insurance policy, please contact us today. We are happy to dive into your specific coverages, limitations, and exclusions and discuss your Business Owners policy.

Will my Business Owners Policy (BOP) respond to a virus-related claim?

A Business Owners Policy or BOP is a commercial insurance policy that bundles several essential commercial insurance products together, including General Liability, Commercial Property, and Business Income, into one convenient policy.This particular coverage option is a great option for small and medium-sized businesses and protects their operation from a variety of common losses, including theft, fire, water damage, wind damage and legal liability.

General Liability Insurance

A typical Commercial General Liability policy safeguards your business from claims due to bodily injury or property damage caused by your business operations or that occurred on your premises.

In order for this coverage to respond to a virus or bacteria-related incident, a customer or visitor must be able to prove that your organization was negligent and failed to exercise reasonable care in creating, enforcing, or communicating the potential risk of contracting said virus on your premise. However, this coverage would likely not initiate if the policy specifically outlined a virus, bacteria contamination, or infectious disease exclusion.

Commercial Property Insurance

Most Commercial Property insurance policies protect your business property and assets, including your building, computers, equipment, and furniture, from a direct physical loss or damage. Common losses that trigger most commercial property policies to engage include a fire, burst pipe, severe weather event, and vandalism, as they often result in a material loss or physical damage to property.

As a result, most Commercial Property policies will likely not respond to a virus-related claim since there is generally a clear lack of physical damage or loss to covered property.

Some BOPs include a handful of additional coverage options, including Business Income and Civil Authority, which at first pass may suggest financial assistance during this unprecedented time.

Business Income Insurance

A Commercial Property policy covers the costs of repairing or replacing the structure of your business based on the specifics of your policy. Business Income Insurance, on the other hand, offers financial support to help you get through the period of time in which your business is unable to operate because of a covered loss.

This particular coverage is designed to reimburse a business owner for lost income and any extra expenses incurred relating to the stop in their business operation after a covered event. Additionally, this policy generally helps businesses pay employees until they are able to open their doors again and may even help cover recurring operating expenses, such as gas, electric, and lease payments.

However, there is one caveat. In order for this coverage to respond, just like Commercial Property insurance, your business must have suffered a direct physical loss or damage by a covered event.

As with most policies, there are a few common exclusions for coverage. The most significant would be the exclusion for loss of income or extra expenses incurred due to contamination by a bacteria or virus. Therefore, it is unlikely that your Business Income or Business Interruption, as it’s commonly written today, will respond to a virus-related claim.

Civil Authority Coverage

An additional type of business income coverage is Civil Authority coverage. This commercial insurance option provides financial assistance for loss of income when a government agency requires you to close or denies access to your business facility. This particular policy was originally designed to react to severe weather, natural disasters, and life-threatening events. Although the breadth of coverage is specific to each individual policy.

Similar to Business Income and Commercial Property insurance, this coverage generally only provides assistance after a business suffers a direct physical loss or damage to their property by a covered event. Consequently, you likely will not see this coverage respond to a loss caused by a virus, infectious disease, or bacteria contamination.

We hope that this general information was able to shed some light on what can be a very complicated subject matter. Please know that you have an ally in the HIG Insurance team, and we will do our very best to help you navigate this situation and keep you informed during this fluid situation.

How can small business owners stay informed during the COVID-19 epidemic?

It may feel like you can’t do much now, but staying informed is critical during this time. The HIG team is turning to a handful of trustworthy sites and sources for all of our COVID-19-related news and information and would encourage you to do the same.

Below is a list of a few links that we have found to be particularly educational for small businesses during this time.

U.S. Small Business Administration:

State of Massachusetts:

State of Rhode Island:

Centers for Disease Control:

World Health Organization: