SARS and Business Income Coverage

Q: Will business income coverage respond if SARS forces a business to close?

Our insured's business has been quarantined, and thus closed, because two of its employees have been diagnosed with SARS (Severe Acute Respiratory Syndrome). It appears that the closure will be of some duration; possibly two weeks or longer. The insured manufactures cardboard packaging for a variety of businesses, and although his business is not large, the demand for his products is great throughout the year.
He is insured on a businessowners special form. What business income coverage can he expect?

A: Unfortunately for your insured, the loss is not covered. Coverage for business income is triggered by direct physical loss of or damage to property at the premises described in the declarations, and SARS, which affects personnel, is not a direct physical loss to property.
Now, although it may appear that there is coverage because the business was closed by action of civil authority, this is not the case. The coverage for loss of business income because access to the insured business is prohibited only applies when there is direct physical loss or damage caused by a peril insured against to property other than at the described premises. So here again, there is no physical loss to property, so there is no coverage.

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