Are Vermont business owners entitled to coverage under their business income insurance policy for pandemic-related losses?

When business operations are interrupted as a result of a state or national emergency, it often causes a business’ flow of income to become disrupted as well.  And because business owners know how devastating just a small disruption to their operations could be, many opt to purchase business interruption insurance with or without certain provisions (i.e. business income coverage, civil authority coverage, etc.). For many business owners, having this business interruption coverage gives them the peace of mind knowing that their business is protected should something halt their operations.

Unfortunately, this worry-free state of mind has been replaced with concern after the COVID-19 pandemic interrupted business operations in Vermont and owners learned that their business interruption insurance or a provision under their policy wouldn’t cover pandemic-related losses.


Vermont Department of Financial Regulation Says Business Income Insurance Typically Only Covers Losses Associated with Physical Damage


After businesses in Vermont were forced to close to help curb the spread of the COVID-19 virus, business owners everywhere began filing claims with their insurers. Many insurance companies replied to these requests for help with a denial notice citing that there is no evidence of physical damage, hence, there is no coverage available. The Vermont Department of Financial Regulation (DFR) began receiving an influx of questions from business owners, many asking whether their business policy will provide loss of income coverage for loss of business during the COVID-19 pandemic.

And here is the answer the DFR provided.

According to the DFR, if a business owner’s policy includes business income coverage, then they should review the section in their policy titled “covered causes of loss.” This section should outline what is a coveredperil and it may even list the perils that are excluded. The DFR says that business income coverage “typically covers direct physical loss to covered property, therefore, if there is no damage to the building or business’ personal property, there would be no coverage for loss of income in most business policies.”


Many Business Owners Believe the COVID-19 Virus Does Cause Physical Damage


Although insurers allege that the COVID-19 virus doesn’t cause physical damage, the majority of business owners seeking coverage under their business interruption policy say that because the virus lives can live on certain surfaces for hours or even days, it does cause “physical damage,” hence, they should be provided with the coverage they paid for. Now, because business owners and insurers are unable to agree on the matter, it seems the decision is going to be left up to the courts should a business decide to sue their insurer.

If you think your insurer wrongfully denied your business interruption claim and are considering suing, USAttorneys.com can place you in contact with Vermont insurance claims denial lawyers who are ready to help you.

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