The Reschini Blog: Preparing for Covid Claims

Covid-19 has placed a spotlight on insurers, who have been preparing for the waves of inquiries and claims across multiple categories of coverage.

Many insurers, following the 2003 SARS outbreak, introduced exclusion clauses for communicable diseases and epidemics/pandemics into most non-life products such as business interruption and travel insurance.

Because business interruption policies usually pay out only if physical damage occurs to an organization’s assets or operations, coronavirus-related claims may not be covered.  Claims and related litigation have already begun and the marketplace is reacting.

Travel insurance may offer cover if a customer is diagnosed with the virus before or during a trip, but not for travel cancelled because of the pandemic.  The lone exception would be if the policyholder has taken out premium “any cause” cover, but very few do.  The pandemic may actually spur increased interest in such premium policies.

Two major areas to watch are trade credit insurance and workers compensation.

Trade credit insurance covers businesses against debts that can’t be paid by customers or suppliers.  Small-to-medium sized businesses could be hit hard due to supply chain disruption and a crunch in business levels. The cost may hinge on the extent of the pandemic and government restrictions on non-essential businesses.  Claim activity in this sector could spiral quickly.

Regarding workers’ compensation, claims could rise from employees asserting they were not adequately protected by their employers against exposure to the virus brought about by their normal working duties.  Insurers offering this type of coverage to employers should prepare for this level of increased activity.

The professionals at The Reschini Group can guide you in determining how best to safeguard your organization against exposure in the wake of Covid-19.


Copyright 2021 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Life Happens: Business Interruption Coverage

When one thinks of “standard” insurance, it’s for damage or loss of property.  Furniture destroyed by a fire, stolen equipment, building damage from a violent storm.  You buy this insurance to help recoup the cost of rebuilding or replacing that property, right?

But life happens.  The unexpected arrives with unexpected consequences.  Such as, losses resulting from a business not being able to operate due to property damage.  That’s a different level of coverage know as business interruption, or business income, insurance.

When a business is shut down due to a damaging event, revenue slows down or ceases entirely.  But, at the same time, the financial obligations of the business continue as before, plus any additional expenses as a result of the disruption.  With business interruption coverage, many of these costs and losses can be reimbursed. According to the Insurance Information Institute, business interruption insurance will cover: revenue lost due to the closure; fixed expenses, such as rent and utility costs; and expenses of operating from a temporary location.

Determining a business interruption loss involves establishing what the business would have earned had the loss not occurred.  Insurance companies take into account past tax returns, profit and loss statements, projected sales and non-continuing expenses.  Business interruption coverage is not sold as a stand-alone policy. It can be obtained as part of the following types of policies:

  • Commercial property insurance—You can add an endorsement or rider to commercial property insurance that will extend the policy’s coverage to business interruption losses.
  • Business owners policy (BOP)—Intended for small businesses, this type of insurance package policy includes property, liability and business interruption coverage.
  • Commercial package policy (CPP)—CPPs are flexible policies that can be customized with a range of options, including business interruption coverage.

Time limits apply to business interruption coverage, so be sure to discuss limitations and exceptions with your insurer or insurance professional, and whether purchasing extended business income coverage is a good option for your business.  The professionals at The Reschini Group are experts in these options, and can help you determine the right business interruption coverage for your unique situation.

Copyright 2018 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.


Covering the Recovery: Business Interruption Insurance

By Mike Drew, The Reschini Group

Business Interruption Insurance for Operational Recovery

Through an accident, a fire, a natural disaster – the cause of the event can be any number of things – you have lost your property and inventory required to conduct a profitable business.

As if that weren’t enough of a setback, you quickly come to the realization that, without those essentials, there remains no way to generate future income until your property and inventory can be rebuilt and restocked.

Business interruption insurance replaces revenue lost when a company cannot conduct business after a catastrophic event.  Terms of a specifically written policy determine how much in lost revenue can be provided on a per-diem basis, to cover expenses that may include mortgage and insurance payments, employee payroll, and others.  This specialized segment of insurance coverage can be purchased on an annual schedule, and can extend beyond the timeframe required to repair or replace the directly damaged property.

The key elements of a favorable claims settlement would be the policy language being written broadly enough to cover the business expenses and profits that the owners want covered for the period of time needed to resume normal activities.  Claims are then settled based upon the details in the policy language, so policyholders may prefer very broadly written coverage, sufficient to handle a true catastrophe.

Once a claim is filed, a brief waiting period must be observed after the loss is suffered by the business – think of it as the equivalent of paying a small deductible – before payments to cover any lost revenue can begin.

Any discussion of business interruption, however, must also include a reference to coverage for extra expenses the policyholder may incur beyond normal operating expenses during the period of restoration that reduce the amount of loss-related expenses incurred to mitigate damages.  These “extra expenses” may include generators, temporary office space and computer equipment, overtime wages, employee meals outside of normal workdays, and expediting expenses necessary to speed the replacement of machinery, equipment or other personal property.

Insurance exists to help keep people and their enterprises on their feet, should the unthinkable happen.  Business interruption insurance fulfills that role in striking fashion.  It’s worth the investment, to safeguard your larger investment.

The professionals at The Reschini Group can help talk you through how business interruption insurance can be used to protect your company, including value-add services such as disaster recovery planning and business income worksheets to more accurately plan for a worst-case scenario.  Contact us at 724-349-1300 to set up a time to talk.

Copyright 2017 The Reschini Group


The Reschini Group provides these updates for information only.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.