As fall approaches, schools across the country are preparing for a year unlike any other. While much of the current conversation centers around whether, and how, to reopen schools, the downstream effects of school closures on businesses has been the topic of much less discussion. For example, companies that provide school lunches may find their contracts cancelled, or at least reduced, if schools do not reopen. High school sports teams may not be purchasing team gear or apparel this fall. Maintenance companies that contract with schools to repair buses may find that their services are no longer needed. And school districts that may have otherwise purchased new desks, blackboards, or other classroom supplies may opt not to do so this year.
Insurance coverage may provide some relief to these businesses affected by school closures. While the primary focus of business interruption coverage has been on those directly impacted by the coronavirus – stores and restaurants forced to close their doors – some property policies may provide coverage for businesses whose customers have closed.
Under these policies, an insured may be entitled to coverage when its business is interrupted because property owned and operated by others has been affected (for example, due to physical loss or damage at the property, or closure by order of civil authority), if those properties accept or receive the insured’s products or services. A company whose contracts to provide certain classroom materials to schools were cancelled because the schools closed for the year may be able to recover its losses under such an insurance policy.
All businesses whose business has been interrupted due to the impact of coronavirus on their customers – whether or not those customers are schools – should review their policies to determine whether such business interruption coverage may be available to them.