Can policyholders expect coverage for loss of Business Income if (1) they must close their business and decontaminate it after the property is exposed to persons with the Ebola virus or (2) civil authorities prohibit access to their property because of such exposure?
In the first circumstance, policyholders would seek Business Income coverage, which covers policyholders for lost income and unavoidable continuing expenses when damage to property causes a suspension of business operations. In the second circumstance, policyholders would seek coverage under Civil or Military Authority clauses, covering loss of income where an action or order of an authority, taken or issued on account of property damage, prevents access to the policyholder’s premises. The key question under either coverage is whether the property exposed to an Ebola patient has suffered “property damage.”
Case law supports coverage in either circumstance. First, the Ebola virus, while not particularly hardy, can survive on dry surfaces for hours after exposure, and for days in expelled fluids kept at room temperature. Accordingly, cleanup must be undertaken in a thorough manner by professionals wearing protective equipment.
Courts and insurance companies have found that property infused with radioactive dust, bacteria or other contaminants has suffered property damage sufficient to trigger Business Income coverage. American Alliance Insurance Co. v. Keleket X-Ray Corp., 248 F.2d 920 (6th Cir. 1957) (radioactive dust and radon gas); Brand Mgt., Inc. v. Maryland Cas. Co., No. 05-cv-02293, 2007 WL 1772063 (D. Colo. June 18, 2007) (listeria); Cooper v. Travelers Indem. Co., No. C-01-2400, 2002 WL 32775680 (N.D. Cal. Nov. 4, 2002) (e-coli); Schlamm Stone & Dolan, LLP v. Seneca Ins. Co., No. 603009/2002, 2005 WL 600021 (N.Y. Supr. Mar. 16, 2005) (dust from the WTC). Under these authorities, property exposed to the Ebola virus has suffered “property damage.”
Business Income coverage should exist until the property can be decontaminated, and is found to be safe to inhabit by the authorities. Urology Clinic of New Orleans, Inc. v. United Fire & Cas. Co., 993 So. 2d 803 (La. App. 2008) (finding Business Income coverage existed until the fire marshal approved re-occupancy). Thereafter, policyholders should have coverage for continuing losses due to reputational injury under Extended Business Income coverages.
Civil Authority coverage should exist through the duration of the order of the Civil Authority. To the extent that the policyholder’s loss is covered by both Business Income and Civil Authority coverage, it can choose to claim under either, both, or one then the other, so as to maximize recovery. Audubon Internal Medicine Group v. Zurich Am. Ins. Co., No. 07-4874, 2008 WL 2718928 (E.D. La. July 10, 2008).