INSURANCE ADMINISTRATION ISSUES ADVISORY ON BUSINESS INTERRUPTION INSURANCE
On March 18, 2020, the Maryland Insurance Administration issued an advisory noting that most policies require a waiting period of 24 to 72 hours before coverage begins and coverage continues for the reasonable period of time to restore the property and reopen, subject to the coverage limit of liability. Some commercial policies provide Business Interruption coverage when a business is shut down due to an order by a civil authority. However, the policy still typically requires a physical loss from a covered peril as the underlying cause of the business shut down to apply.
It also noted that all insurance policies have exclusions of coverage for risks that are too great to be underwritten at an affordable price and the potential loss costs from such perils are so extreme that providing coverage would jeopardize the financial solvency of property insurers. Global pandemics like COVID-19 usually fall into this category. However, policies can be different.
We recommended that businesses review their policies and contact their insurance professionals with any questions.