The J Boat crash video seems pretty appropriate as I write this blog. I am at the airport flying up to the panhandle to meet Hurricane Michael clients. Nobody is here. No line at Starbucks—they even poured the cream because the self-help stand is shut down. “Shut down” is what has happened to us.

It was not like this after September 11. Things were delayed and it was frustrating to move along. Our economy is slowed down, but many businesses are shut down. You do not need to be an economist to see there are no lines of people going to work and doing what we normally do.

Insurance is a financial and social product. It spreads the risk of financial loss and allows us to hedge against various perils. It truly is a wonderful product when it works, and we have cover for calamities which inevitably arise as part of life. But there is no hedging this loss because few businesses have insurance coverage for what is happening today. If most of us did, I am not even certain whether the insurance companies could withstand the claims onslaught.

The business income loss under the vast majority of commercial policies have a number of problems providing coverage including exclusions for pandemics. I spent time last week thinking about “property damage” being caused by the corona virus—but how many businesses actually have the virus on the property? This “shut down” is caused mostly by attempts to prevent the risk of the virus spreading between us—smooth the curve of infection.

An article in Law360, 4 Key Corona Virus Battlegrounds, is pretty close to what I have been thinking on the topic:

For either type of insurance to apply, there must be proof of a ‘direct physical loss’ to a property — in the case of business interruption coverage, the policyholder’s property, or in the case of contingent business interruption, the supplier’s property.

If a property has been shuttered merely due to fears of the coronavirus, but the building remains habitable, the direct physical loss requirement won’t be met, according to attorneys.

‘We’re shutting down as a global community not because property is impaired but because people are impaired,’ said Wilson Elser Moskowitz Edelman & Dicker LLP partner Paul S. White, who represents insurers. ‘The practical nature is that there may be some direct physical damage or physical loss to some property, but it is probably going to be the exception to have a direct physical loss rather than the rule.’

If, however, an infected person has been inside of a property and physically contaminated it, that may be enough to meet the direct physical loss requirement, attorneys said.

‘The ongoing research on COVID-19 indicates it may last longer in environments that are not hospitable, so it is possible that this will be a livelier coverage issue than it has been in the past,’ said Klein.

Even if the initial threshold for a direct physical loss is met, though, the policyholder could run into other problems depending on the wording of their policy. Some commercial property policies with business interruption coverage contain exclusions for property damage arising from pathogens, bacteria, viruses and other disease-causing agents.1

Event insurance coverage did allow by endorsement for cancellation by this virus outbreak. But, most articles in the trade indicate that few purchased this added coverage. Event promoters cannot purchase it now. Event coverage is not going to help most business owners in the non-event business anyway.

My fear is that the most useful insurance for working people is not property insurance but unemployment insurance. When your business owner has to shut his doors, even temporarily, and it is not your fault you do not have a job or work to get paid to do, you can claim unemployment insurance. Since few are sick but many will not have jobs soon, my saddest prediction is these lost income claims will be the ones paid.

Thought For The Day

Too many of us are not living our dreams because we are living our fears.
—Les Brown
1 Sistrunk, Jeff, 4 Key Corona Virus Battlegrounds, March 13, 2020, Law360, Available through pay-site,