2020 definitely isn’t playing out how we thought it would. America started the year with record low unemployment rates but by the end of May, had lost most of the gains it had made in the past fifty years and was looking at Great Depression levels of unemployment. Small businesses have definitely been hit hard, with most of the government issued coronavirus-related measures disrupting their operations and effectively cutting off their cash flows. Although most states with legal cannabis deemed the industry essential, cannabis establishments haven’t been spared from losses.
The federal government issued disaster relief funds to be dispersed to small businesses through the Small Business Administration but due to federal prohibition, cannabis businesses have been denied access to these funds. However, this doesn’t mean you just have to grin and bear it. Insurance may be a way to reduce the financial trauma your business is currently experiencing. Business interruption insurance, for instance, covers losses from direct interruption to the insured’s operations due natural disasters or fire, and the insurer makes good on items such as lost revenues, rent or utilities.
Contingent business interruption, on the other hand, is generally concerned with lost income due to third party issues like problems with vendors or suppliers. However, the type of coverage you get depends on the policy and riders you purchased. After the 2003 SARS outbreak, most insurers started excluding coverage from disease outbreaks, but some insurers offer disease-related riders for purchase.
Conventional policies can cover everything from payroll, extended period of indemnity, contingent extra expense (reimburses lost profits and expenses arising from interruptions at the supplier’s or customer’s location), to ingress/egress which pays for loss of income caused by physical loss that prevents entry into the insured’s business. Many policies that cover business interruption provide that mere loss of income alone may not qualify, and they require the insured to prove they have lost physical use of the business.
If you were lucky or blessed with the foresight to get disease-specific coverage, it could offer compensation for losses arising from the temporary closure of the business to sanitize and protect employers and consumers.
The first thing you ought to do if you’re hoping to get some coverage during this crisis is to request a copy of your policy. Go through it with a fine-toothed comb to see what exactly is covered and what isn’t. Since such documents tend to be drafted by insurance companies’ lawyers, try to get help from someone equally knowledgeable to level the playing field. You may end up getting enough coverage to help you weather the coronavirus pandemic.
Analysts say all cannabis sector players, such as SinglePoint Inc. (OTCQB: SING), are likely to learn lots of lessons from this pandemic and expand their insurance coverage to avoid suffering lots of losses when another disaster of this magnitude strikes.
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