Business Interruption on Influenza Pandemic

SARS in 2003 had a severe impact on business activity in certain sectors of the economy (Hotels, Airlines, Travel and Health industries) mainly in Asia, a Flu Pandemic, with its greater contagion, is likely to hit the broader business communities globally.


“Business interruption” cover commonly exclude infectious diseases cover. However some underwriters may consider to allow extension on this infectious deseases.


However what might be an acceptable Infectious Diseases wording for SARS might not be at all appropriate for Pandemic Flu, noting the much greater morbidity of influenza.  Consider the following commonly allowed extension –




 It is hereby agreed and declared that the insurance by this Policy is extended to cover loss as insured hereinafter directly resulting from interruption of or inference with the Business carried on by the insured at the Premises in consequence of:


a)   Infectious or contagious disease manifested by any person whilst at the Premises


b)   Existence of toxic substances on the Premises


c)  Murder or suicide occurring at the Premises


d)  Injury or illness sustained by any guest arising from or traceable to foreign or injurious material in  food or drinks provided on the Premises


e)   Closing of the whole or part of the Premises by order of a competent Public Authority consequent upon defects in the drains or other sanitary arrangements at the premises.


Such loss for the purpose of this Section being deemed to be loss resulting from damage.”



Applying that wording for example to a Hotel or Resort risk, all that would be required for this extension to be triggered is for someone (employee or guest) to exhibit flu symptoms whilst at the premises.  The major economic loss for the Hotel however arises more from downturn in trade through travel restrictions (which is external to the premises itself) rather than quarantining on discovery of someone having influenza.  Likelihood is that we’d have a full loss.


Consider also materials and supplies being quarantined as a result of a pandemic and the impact to manufacturers through interruption of production processes.  With infectious disease being deemed “as loss resulting from Damage” could there be a loss triggered under Suppliers’ extension of B.I. covers?  Similarly with Customers’ extension.


I’d very much welcome your thoughts on this issue


Any questions or comments please feel free to give me a call


IMAM MUSJAB – 08128079130



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