By ALLEN MCQUISTON
The Jemez Agency

Many businesses have insurance policies that are meant to kick in when disaster strikes. But few of those policies will cover losses incurred because of the Coronavirus outbreak.

Companies typically buy a kind of coverage known as business interruption insurance as part of their property policies, which pays cash to make up for lost revenue when a business has to halt operations unexpectedly. A close relative, contingent business interruption insurance, kicks in when the shutdown is at a supplier of the insured company.

At first glance, those might seem perfect for the current epidemic, which has caused quarantines that shut down factories in China, severed links in supply chains and disrupted business activity for hundreds of companies from Microsoft to Marriott. But those policies almost always cite “direct physical loss or damage” as a requirement to get a payment.

Quarantines and travel bans can make it just as impossible for workers to do their jobs as destruction from a fire, flood or earthquake, but do not cause the physical damage to workplaces that is necessary to trigger successful business interruption claims.

That means companies will have to absorb much of the losses themselves, either directly or with the money that very large companies often set aside in special self-insurance reserves.

Business interruption insurance policies were more permissive in the past. But after other viral epidemics — such as SARS in 2003, Ebola in West Africa starting in 2014 and Zika, most recently in 2015 — insurance companies realized that business-interruption claims could become unwieldy if they covered shutdowns tied to outbreaks of disease.

Since then, insurers have taken steps to exclude epidemics — even as companies’ supply chains have become more complicated, and widespread business and recreational travel has greatly increased the potential for contagion to spread around the world.

Insurers are not viewing it as being up there with Hurricane Katrina. That 2005 disaster broke all records for the industry, with damage covered by insurance of more than $40 billion in six states, not counting payouts by the National Flood Insurance Program, which needed a taxpayer bailout to keep going.

With the coronavirus slowing manufacturers that can’t get key components, causing cancellations by airlines and hotels and reducing foot traffic to retailers, the losses from the outbreak will probably be much larger — but less likely to be insured.

Even contingent business interruption insurance, which handles claims for disruptions from a policyholder’s suppliers, probably won’t cover virus-related losses.

In short, businesses who lose revenue due to this virus, in most cases, will not have insurance coverage.