Standard Covered Perils Language Applicable to Coronavirus / COVID-19 Business Interruption and Loss of Business Income Insurance Claims.
Each insurance policy is unique and contains the contractual obligations of each party to the insuring agreement. As with any insurance claim, any successful business interruption or loss of business income claims begins with an understanding of the obligations in the policy. That vital understanding begins with a thorough review of the coverage language. While each insurance policy is unique, there are some fairly widely used forms that can be used for illustrative purposes.
"Insurance Services Office Inc. (ISO) — [is] an organization that collects statistical data, promulgates rating information, develops standard policy1 forms, and files information with state regulators on behalf of insurance companies that purchase its services." 2 "The most widely used ISO commercial property coverage forms are the building and personal property coverage form (CP 00 10) and the business income and extra expense coverage form (CP 00 30)." 3
At the heart of any insurance policy is an agreement. The insured pays money in the form of premiums, in exchange for a promise of compensation if a given event occurs. As, by their nature, these events are tragic, they are referred to as risks or perils. This is the notion of "coverage". If the specified peril occurs, the insurance company owes compensation, i.e. loss is covered. At least in theory. I've litigated countless coverage issues over the course of 25 years. The experience has taught me that the contention of a covered loss is not always accepted by the insurance company. At least not without a fight.
There are two types of coverages applicable to the typical loss of business income insurance claim. All perils [unless excluded] and named perils.
Named perils coverage forms.
"Broad Causes of Loss Form — one of the three Insurance Services Office, Inc. (ISO), commercial property insurance causes of loss forms. Causes of loss forms establish and define the causes of loss (or perils) for which coverage is provided. The broad causes of loss form (CP 10 20) provides named perils coverage for the perils insured against in the basic causes of loss form (fire, lightning, explosion, smoke, windstorm, hail, riot, civil commotion, aircraft, vehicles, vandalism, sprinkler leakage, sinkhole collapse, volcanic action), plus the following additional perils: falling objects; weight of snow, ice, or sleet; water damage (in the form of leakage from appliances); and collapse from specified causes." 4
"Basic Causes of Loss Form — one of the three Insurance Services Office, Inc. (ISO), commercial property insurance causes of loss forms. Causes of loss forms establish and define the causes of loss (or perils) for which coverage is provided. The basic causes of loss form (CP 10 10) provides coverage for the following named perils: fire, lightning, explosion, smoke, windstorm, hail, riot, civil commotion, aircraft, vehicles, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action."5
Special cause of loss form.
"Special Causes of Loss Form — one of the three Insurance Services Office, Inc. (ISO), commercial property insurance causes of loss forms. Causes of loss forms establish and define the causes of loss (or perils) for which coverage is provided. The special causes of loss form (CP 10 30) provides what is referred to as all risks coverage. 6 coverage for loss from any cause except those that are specifically excluded. The other two ISO causes of loss forms (the basic causes of loss form and the broad causes of loss form) provide what is referred to as named perils coverage: coverage for loss from only the particular causes that are listed in the policy as covered." 7
Although a thorough understanding of the specific insurance policy at issue is mandatory, obviously, all risk coverage is broader, and therefore superior to limited 'named perils coverage'.
I battle insurance companies that have denied claims every day. I’ve litigated thousands of such disputes over the course of my career. If your business has been closed by the State, I’d be happy to discuss your coverage, losses and potential claims with you in a manner of your choosing. Please fill out the contact form on the site, or call me directly at 410-591-2835.
FN 1 "Commercial Property Coverage Forms — Insurance Services Office, Inc. (ISO), commercial property insurance forms that define, limit, and explain what property or property interest is covered. An ISO commercial property policy consists of: one or more coverage forms, one or more causes of loss forms, the commercial property conditions form, the common policy conditions form, and the declarations."
FN 2 https://www.irmi.com/term/insurance-definitions/insurance-services-office-inc
FN 3 https://www.irmi.com/term/insurance-definitions/commercial-property-coverage-forms."
FN6 "All Risks Coverage — property insurance covering loss arising from any fortuitous cause except those that are specifically excluded. This is in contrast to named perils coverage, which applies only to loss arising out of causes that are listed as covered. Although many industry practitioners continue to use the term "all risks" to describe this approach to defining covered causes of loss in a property insurance policy, it is no longer used in insurance policies because of concern that the word "all" suggests coverage that is broader than it actually is. Because of this concern, some industry practitioners have begun to use the term "open perils" or "special perils" instead of "all risks." Source: https://www.irmi.com/term/insurance-definitions/all-risks-coverage