As the coronavirus pandemic continues, your practice is losing revenue and incurring additional expenses as a result of the disruption. Even if you receive a Paycheck Protection Program (PPP) loan, which can be forgiven under certain circumstances, that loan amount will not make your practice whole.

A PPP loan covers only certain expenses (payroll, rent, interest, and utilities) and applies only for a limited time (8 weeks after funding). Thus, your practice will still suffer losses from expenses not covered, expenses that are covered but outside the 8-week window, as well as the lost patient revenue during the period your office is only open for emergencies.

Can your business interruption insurance coverage help reimburse your losses?

What is Business Interruption Insurance?

Business interruption insurance protects against economic losses resulting from the inability to operate your office normally due to physical damage. The coverage typically reimburses your practice for the loss of revenue during the business interruption timeframe, and for continuing normal operating expenses incurred during the time it takes to restore the damaged property so it can be used again.

Normally, business interruption coverage kicks in when your practice is closed due to a fire, flood, hurricane, tornado, earthquake, explosion, or other calamity causing physical damage to your office. Don’t confuse this with your business overhead insurance coverage, which kicks in only in the event of your illness or personal disability.

Can you obtain reimbursement for a claim when your practice is shuttered due to the coronavirus? It depends on a number of factors, including the terms and conditions of your policy, as well as the circumstances of your loss.

Virus Coverage

In response to prior outbreaks (SARS, Ebola, E. coli, etc.), some policies have specific provisions that exclude losses resulting from viruses. If that’s not the case in your policy, you could argue the coronavirus was physically present in your office and the business interruption was due to the physical loss relating to the contamination. Since this would be difficult to prove, your chances for reimbursement under this approach are slim.

Forced Closure by Government Authorities

Your chances of reimbursement are better if your claim is based on the fact your practice was forced to close by a civil authority (government). Note this won’t work if your practice is closed solely due to a recommendation from the ADA, CMS, or even the Surgeon General. However, it does apply if your state, county, or local government forced your practice to close through a “stay-at-home” or “shelter-in- place” order, which is now the case for doctors in virtually all states. One Washington state orthodontist has a business interruption claim pending, based on her state’s required practice closing.

This coverage usually requires there be physical damage to adjacent or nearby property to qualify. While most courts have not awarded damages unless there is physical damage to property, a few have, on the basis that the loss of the use of your property (office building) amounted to a direct physical loss.

While the odds of recovering are not great, you should still file a claim under your general liability policy to recover your practice’s unreimbursed losses. Even if your claim is denied initially, it will preserve your right to claim reimbursement in a future settlement, or in an individual or class action lawsuit which may follow.

States Pressuring Insurance Companies to Pay

Since states license and regulate insurance companies, they maintain substantial clout over them. As losses mount from the government-ordered shutdowns, and more businesses are going under, states are ramping up pressure on property and casualty insurance companies to use some of their surplus reserves, which now total over $800 billion, to pay up on business interruption policies, even if it means going beyond the legal language of the policy contract. Lawmakers in at least four states have proposed laws to expand coverage to include business interruption losses due to the coronavirus.

Updated April 29, 2020. Originally published April 8, 2020.