Starnes Davis Florie


Coronavirus (COVID-19) and Business Interruption, Property Damage, and Other Insurance Coverage Issues

March 30, 2020

Starnes Davis Florie understands that there are many small businesses and larger companies justifiably concerned about the interruptions in their businesses and other financial and economic losses caused by the COVID-19 pandemic.  Your insurance coverage can play a major role in your company’s survival.  The availability of insurance coverage for commercial losses caused by “communicable or infectious diseases,” like a coronavirus, is dependent on the specific provisions of a company’s policies.

For Businesses and Professionals

We recommend that our business clients carefully review their insurance policies—including, but not limited to, commercial general liability and first-party property insurance—to determine the scope of coverage, if any, for business interruption, supply-chain disruption, non-structural property damage, lost earnings, closure of public gathering places and all “nonessential” business activity by “order of civil or military authority,” and other losses, with particular attention to whether any policies specifically cover losses.

Professionals should make similar assessments for possible defense coverage under any errors and omissions (“E&O”) insurance for any third-party claims that may be brought against them.

Corporate directors and officers may be subjected to shareholder lawsuits alleging that their unreasonable actions or inaction in response to coronavirus caused the company economic loss.  In particular, a company’s shareholders may contend that the directors and officers failed to develop adequate contingency plans, failed to observe protocols recommended or required by governmental authorities, and failed to disclose the risks of coronavirus posed to the company’s business and financial performance.  Such claims may be covered by directors and officers (“D&O”) insurance policies.

For Insurers

For their part, insurers should review their contracts with their insureds to determine whether there are provisions that specifically exclude damage caused by biological agents or disease, or make distinctions between bacteria versus viruses; whether such exclusions are complete, or partial; and whether they contain sublimits or waiting periods, or both.  Each determination should be made on an intensively fact-based analysis, invoking reservations of rights where appropriate, to be of maximum assistance to insureds and to avoid subsequent claims for bath faith denials.

For Insureds and Insurers

Both insureds and insurers will need to be alert to any duties imposed by their policies, including prerequisites to coverage as well as loss mitigation and related extra expense provisions in order to fulfill their respective duties under those contracts.

If you have any questions or need legal support in evaluating COVID-19 insurance coverage issues,  please contact:

Richard Davis at 205-868-6044 or

Scott Salter at 205-868-6007 or

Stephen Still at 205-868-6085 or

Scott Stevens at 251-405-5067 or

Alex Wood at 251-445-4715 or

Click Here to view more COVID-19 Resources

This information is not intended to provide legal advice, and no legal or business decision should be based on its content. No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.  Read full disclaimer.

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