Insurance for loss of business amid COVID-19

ORIGINATING from Wuhan, China, the coronavirus (COVID-19) has aggressively spread to different parts of the world causing serious economic woes.
One of the sectors that have been severely affected by COVID-19 is the tourism and leisure sector. For example, Zambia’s tourism sector has seen an increased loss of over US$6 million as a result cancellations of tourists’ planned visits.
With severe losses currently being experienced, it is necessary to examine the extent to which losses directly arising from COVID-19 can be recovered from insurance policies.
Generally, the most probable form of insurance likely to respond to business losses is known as business interruption (BI) or loss of profits insurance.
The policy is designed to pay the insured following material damage, and this should be during the indemnity period.
Simply put, the indemnity period is the duration of the interruption or the period that the business takes to get back to normal operations, vis-à-vis after damaged property has been repaired.
The original intention of a BI policy was to cover losses that are occasioned by an interruption due to a direct physical loss or damage to the insured property.
Such loss must be caused by an insured peril such as fire, explosion, lightning, flood, etc.
Consequently, a BI policy will only respond where there is physical damage to property in the first place or where there is admissibility of liability. In other words, a material damage claim may be admissible in the sense that it was caused by an CLICK TO READ MORE

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