Standard business interruption coverage not well-equipped to handle H1N1: Marsh

Influenza A (H1N1) could result in significant disruptions to the operation of a business, but there are few instances in which a standard business interruption policy will provide coverage, according to a recent Marsh report, Influenza A (H1N1) — Business Interruption and Time Element Coverage Considerations.
Standard business interruption (BI) coverage often provides for the actual loss of net profit, plus necessary continuing expenses:
• caused by the suspension of business;
• during a period of restoration or recovery;
• occurring because of direct physical loss or damage to property;
• at the premises described under the policy; and
• as a result of a covered cause of loss.
But several of these standard BI coverage terms are problematic in the context of H1N1, Marsh notes.
Some insurers might contend the viral contamination of a business is not the same as “direct physical loss or damage to the property.” Others might assert that possible contamination, proximity to contaminated premises or fear of contamination also do not count as “physical damage” as interpreted in a standard BI policy.
Furthermore, policies might exclude viruses, or they might exclude “contamination” and viruses will fall under this definition, Marsh notes.
Insurers might also interpret BI policies to respond to damage related to physical structures on the property, as opposed to threats to the health of those entering the physical structures on the property.