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Commercial Property and the Effects of COVID-19

Updated: Jul 8, 2021

Covid-19 Yield Sign

After the COVID-19 virus hit the U.S. earlier this year, the state of California implemented the Tenant Relief Act of 2020. The new rules of the Relief Act have created a financial hardship for property owners.

Many property owners have turned to their insurance policies for help from this deadly pandemic, including coverage for loss of income. Unfortunately, property insurance policies do not cover losses due to virus or pandemics. Below are a few key points:

Insurance Policies Cover Specific Perils

  • Insurance carriers provide rates based on the specific perils that are covered on the policy. Common perils for property insurance include damages from Fire, Water, Wind, and Hail.

  • Each property policy specifically states which perils are covered and which perils are specifically excluded.

  • Almost all Commercial property insurance policies exclude claims from damages related to “fungi, virus and bacteria” and many specifically name pandemics.

Loss Of Income Is A Property Coverage

Loss of income coverage falls under the property section of an insurance policy, not the liability section. Therefore, there would need to be a “direct physical loss” to the building location on the policy that causes loss of income.

For example, a fire that damages the property and has caused the property to become uninhabitable. The insurance carrier will pay for loss of rental income until the damage has been repaired and the property is fit for tenants again.

Expect New Policy Coverages

While insurance policies currently do not cover losses due to virus, I do expect insurance carriers to begin to implement related coverages soon. This situation is very similar to the terrorist attacks of 9/11. After 9/11, Congress passed the Terrorism Risk Insurance Act (TRIA) which enabled insurance carriers to provide coverage for terrorist attacks. Almost all commercial insurance policies now have a mandatory terrorism offer on policies. Coverage for Virus/Pandemics should follow suit.

Proper Liability Coverage Is More Important Than Ever

With the pandemic creating an enormous financial impact on millions of American households, maintaining proper liability coverage is more important than ever. Some tenants have been pushed to make irrational and unethical decisions and have filed lawsuits against their landlord for dubious claims. Some examples include lawsuits for “slip and fall” injuries at the property location, or lawsuits claiming unsafe living conditions.

In California, court rulings favor the tenant, which leads to the insurance carrier paying out claims on behalf of the property owner. If you do not have proper coverage you may be forced to pay these claims out of pocket.

In addition, many property owners have not reviewed their coverages in years and do not carry the proper insurance coverage to fully protect themselves and their property.


For a review of your current policy, or to request a free quote please reach out to Rob by clicking on the link below.

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Ives Insurance Services is a full service, independent agency that has been in business for over 60 years. We write all lines of coverage with a strong focus on property.

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