In the age of new coronavirus, it is important to identify areas in which your insurance business might be threatened by a lawsuit for failing to provide coverage in the aftermath of (the first wave of) nonessential business shutdowns.

Many nonessential businesses that were shut down by state or local governments have looked to their business interruption or business income insurance for relief. This type of coverage is typically included in a property insurance package. Most, however, have faced resistance from their insurers when it comes to paying claims related to the pandemic.

Generally, in order for coverage to be triggered, these policies require:

• Direct physical loss or damage;
• To covered property;
• Arising out of a covered peril; and
• Resulting in the suspension of the business' operations.

In cases where it is determined that coverage is triggered, an insured business may be entitled to recover the net income that it would have been generated if the interruption had not occurred along with the operating expenses during the period in which operations were suspended.