Does insurance cover sales loss caused by broken equipment?

Coverage Q&A: The insured was unable to fulfill purchase orders when the elevator in the facility broke down.

An elevator breakdown impacted the insured’s ability to fulfill orders for boxed meals during COVID-19 stay-at-home mandates. (Photo: ALM Archives)

Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. Analysis brought to you by our FC&S experts. 

Editor’s Note: We’ve received an influx of coverage questions regarding COVID-19 and what insurance does or does not cover. This week’s question is slightly different. The insured experienced a loss that wasn’t caused by the coronavirus but that is being impacted due to an influx of business from customers affected by stay-at-home orders. 

Question: I have a client whose business provides boxed lunches. Their plant had an elevator breakdown, which has reduced their capacity to produce products. Extra employees have been hired and are using stairs to bring the product from the top floors down. Due to shelter-in-place orders, the insured has received an increase in purchase orders for the boxed meals, but he cannot fulfill them due to the lack of an elevator.

The insurer denied coverage for the loss of sales by stating the “policy excludes coverage for consequential loss, delay, and loss of market.” I do not agree with the decision as there are emails with requests for a specified number of boxed lunches.

— Subscriber

Answer: To learn the answer to this week’s coverage Q&A, please log into your FC&S Expert Coverage Interpretation account.

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