Do Commercial Property Insurance Policies Cover COVID-19?

Due to the government’s business impact of COVID-19 control measures, companies are looking to their property insurance policies for potential recovery options for ongoing losses. Business owners should be aware that the extreme stresses caused by inevitable economic disruptions may be mitigated by reliance on force majeure clauses in contractual agreements and business interruption provisions outlined in commercial insurance policies. As such, commercial entities need to work together with their property attorney, broker, and other advisors to determine if they may obtain relief from the effects brought by the pandemic.

 

Possible Property Insurer Responses

The scope of government actions to mitigate the virus’s spread and protect community health and safety are changing daily, if not hourly. They have closed down certain areas of the country, enacted quarantine zones, and curtailed travel. These measures have suspended a lot of business activities that rippled through the global economy. Various restrictions related to coronavirus remain in effect in the UAE. For example, in food establishments, social distancing must be maintained at all times among customers, and tables should be at least two meters apart.

Organizations are trying to understand how their property insurance policies might respond to ongoing financial loss. Under traditional property policies, insured physical loss or damage is needed to trigger a response. If coronavirus manifests at insured premises, insurers could assert that the effects are not physical loss or damage with people becoming unwell. They can also contend that fear on the public and possible contamination is not physical loss or damage. In this case, policyholders should consult with law firms in Dubai to test the positions taken by insurers as to what accounts for their policy conditions.

 

Business Interruption Coverage Triggers

An insurance policy offering “business interruption” coverage provides relief from economic distress through indemnification for losses ensuing from the risk insured against. But insurers are likely to view this coverage as being provoked only by insured physical loss or damage, following the cause of loss. This could mean that no coverage will be available where coronavirus is present or suspected to be present. However, in Dubai, property lawyers point out that there are policy extensions such as interruption by civil authority, ingress/egress, attraction or leader property, and contingent business interruption that may respond to losses related to coronavirus.

For instance, if coverage includes an extension for decontamination costs, it can respond to business interruptions caused by the enforcement of either law or ordinance or a government authority prompted by the contaminants’ presence. Another extension that can be used to cover losses related to coronavirus is communicable disease clean-up. It can cover reasonable and necessary costs for cleaning up a contaminated facility and disposing of contaminated materials due to a communicable disease’s actual presence on-premises.

 

Some commercial insurance policies contain more specified forms of business interruption coverage. Suppose your business is suffering losses and needs guidance over your insurance policy. In that case, you can rely on Motei & Associates to provide you with the best real estate lawyer in Dubai. They can work with you to notify insurers or set forth arguments in favor of coverage. Book an appointment today by calling +971 4 435 5959.