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Revenue down? Make Your Insurance Claim. Really.

Make and Preserve Your Insurance Claim

The COVID-19 pandemic has caused many nonprofits and businesses to see a reduction in donations and revenue or to shut down temporarily. If that's you, make your insurance claim.

I can’t stress this enough. Really. You absolutely should make and preserve your insurance claims, even if you do not think you have coverage. I’ll discuss the most common exclusions below, which your insurance agent has likely pointed out. Be sure to respond to them when your insurance company sends you follow-up questions or requests for additional information. Additionally, be very skeptical of the insurance companies’ follow-up questions.

What About Exclusions?

There are two major types of insurance policies that nonprofits typically carry for large interruptions:

Event insurance Business interruption coverage
- Usually found in general business liability policies. As you can imagine, insurance companies are freaking out about coverage. They point to one of three common exclusions as a way to get you not to file a claim:

Physical loss Virus or contagion Pandemic In most states, exclusions must be clear and unambiguous, and attempted exclusions are commonly interpreted against the insurance company.

Physical Loss Exclusion

Many policies have an exclusion for damage that is not covered by a "physical loss." At first glance, you might think that means some physical harm to your property, such as a tornado or flood. However, case law makes it clear in many jurisdictions that "physical loss" actually means "loss of use." After litigation, courts have held that losses for loss of use must be covered. Examples include losses due to a bad spider infestation or an asbestos insulation problem. A governmentally-ordered partial or full shutdown that results in an inability to use your property for your charitable program could very well be a “physical loss” due to the “loss of use.”

Virus or Contagion Exclusion

This exclusion typically excludes damages related to a virus. But there still may be coverage. To the extent, your nonprofit is not directly affected by the virus itself. Instead, it is affected by a shutdown order... Read More