Law Bulletin | April 30, 2020

Business Interruption Insurance – Does It Cover Losses Associated with COVID-19?

As California’s shelter-in-place order is likely to extend past May, many businesses are beginning to explore whether their insurance policies include “business income” or “business interruption” coverage.  Such coverage is a feature of commercial property insurance policies and is designed to protect against the loss of business income as the result of a “covered loss.”

Generally, for coverage to apply, a business must show a suspension of operations, as well as a direct physical loss of or damage to property which was caused by a “covered loss.”  We are seeing that insurance companies are initially attempting to deny coverage on the grounds that most businesses did not suffer physical loss or damage to their properties.  Instead, the business losses are tied to the State’s shelter-in-place orders.  Further, many basic policies do not identify viruses as a “covered loss” and may even specifically exclude coverage for viruses.  Despite these challenges, businesses across the country are already starting to push back against coverage denials and lawsuits have been filed in many jurisdictions.

Ultimately, whether coverage applies depends not only on the exact terms of the policy and individual circumstances, but how these issues will be interpreted by courts.  Due to the extensive losses incurred by so many business nationwide, this will be a closely watched, and likely heavily litigated, issue.

If you believe you may have business interruption coverage, it is important to act quickly.  If you need help or additional information regarding business interruption coverage relating to the COVID-19 pandemic, you may email us through our website at or contact us at (707) 524-1900.  We are here to help.

Stephanie Rothberg

Spaulding McCullough & Tansil LLP