Business interruption insurance doesn't cover viral outbreaks like the COVID-19 pandemic.
Legislative measures are being introduced to force insurance companies to reimburse businesses for pandemic-related losses.
Deep dives
Hurricane, Flood, and Fire Resilience
Despite facing multiple disasters like floods, hurricanes, and fires over the years, Jane Jucker from Three Brothers Bakery emphasized the importance of insurance coverage. From a hundred thousand dollars in flood damages to a million-dollar hurricane event, their business interruption insurance proved essential in covering property damage and lost revenues, showcasing the prudence of such purchases.
Challenges with Business Interruption Insurance for Pandemics
While small businesses like Three Brothers Bakery invested in business interruption insurance, the coverage did not extend to losses from the COVID-19 pandemic due to the lack of physical property damage. This highlighted a common issue where many small businesses were left without insurance reimbursement for pandemic-related shutdowns, leading to financial strains.
Government Response and Legislative Actions
In response to the insurance industry's exclusion of pandemic coverage, legislatures like New York's Robert Carroll and Congresswoman Carolyn Maloney introduced bills to force insurance companies to reimburse businesses for pandemic-related losses. Such legislative measures aimed at consumer and small business protection were seen as crucial, especially as many insurance policies had specific exclusions for pandemic coverage.
The Role of Insurance Industry and Future Resilience
Insurance companies, like Lloyd's of London, navigated challenges from events like hurricanes and the global pandemic. Discussions on the need for pandemic insurance and possible partnership models between the insurance industry and governments emerged as a way to enhance resilience against future catastrophic risks. These initiatives reflected a shift towards rethinking insurance policies and ensuring coverage for unforeseen events.
A fine reading of most policies for “business interruption” reveals that viral outbreaks aren’t covered. Some legislators are demanding that insurance firms pay up anyway. Is it time to rethink insurance entirely?
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