The property insurance industry has been steadfast in its position that COVID-19 does not constitute a “risk of direct physical loss,” the coverage trigger for business interruption (BII) coverage under the Insurance Services Office (ISO) “Special Causes of Loss” property form.

However, this position raises the question: If a virus does not pose a “risk of direct physical loss,” why did the ISO (the same group that drafted this insuring agreement) feel a need to develop form CP 01 40 07 06 titled “Exclusion of Loss Due to Virus or Bacteria,” which specifically excludes coverage for “loss or damage caused by or resulting from any virus”?

This ISO coverage trigger provides broad coverage that, once triggered, is only modified by policy exclusions or limitations. That is, once there is a “risk of direct physical loss” to covered property, unless that cause of loss is excluded, it’s covered.

While there have been numerous court decisions discussing this language, each with twists and turns due to the specific fact patterns of each case, the consensus is that, if the interruption of business is caused by some physical problem with the covered property, coverage is triggered.

Then, barring any exclusion or limitation removing or otherwise limiting coverage, the claim should be paid.