Will Insurance Cover COVID-19 Interruption Loss in Michigan?

As business owners attempt to financially recoup from the mandatory state shutdown and the economic effects of the COVID-19 pandemic, some may look for alternative ways to add to their bottom line, including filing a claim against their insurer for interruption loss. Is this a good idea? Will insurance cover COVID-19 loss in Michigan? The answers to those questions lie within the policy.

A typical business insurance policy requires a loss of net income due to the necessary suspension of business operations caused by direct physical loss at the premises described in the declarations page. Generally, the loss or damages must have been caused by or resulting from a covered cause of loss that is not excluded under the policy.

Damage caused by COVID-19 is usually not considered a direct physical loss since there is no tangible physical injury to the insured property and because damage caused by viruses is not considered a covered cause of loss.

Communicable disease endorsement

An endorsement attached to some insurance policies called the “communicable disease” rider may allow some business owners the opportunity to recover loss due to COVID-19 if the following requirements are met:

1. The business income loss is due to a temporary suspension or shutdown of business operations
2. The business shutdown was ordered by civil authority due to an outbreak of a communicable disease at the insured premises

If those requirements are met, a policy with a communicable disease endorsement may provide limited coverage, including business income losses, the cleaning and disinfecting of the covered premises and stock, and more.

The takeaway

Unfortunately for most business owners, most policies won’t allow for recovery for business income loss due to COVID-19. Policies that have the “communicable disease” endorsement attached may be an exception, though, so business owners with such riders should carefully review their policies.

Help for Business Owners

Business owners in need of assistance or with questions regarding legal issues related to COVID-19 should call 586-726-1000 or visit our website.