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As coronavirus (COVID-19) continues its march across the globe, it has become a significant potential problem for many industries, especially those reliant on suppliers, transporters, distributors, or ultimate customers in countries affected by the virus.  While COVID-19 could implicate many different lines of commercial insurance, one of the most important will be business interruption.  Here, we focus on the coverage perhaps most important for energy and manufacturing companies right now:  contingent business interruption (often referred to as “contingent BI”).  Contingent BI is the subset of business interruption coverage designed to apply when companies in the policyholder’s supply chain or distribution network, rather than the policyholder itself, suffer property damage and a resulting disruption of business.

COVID-19 has made the importance of contingent business interruption coverage particularly clear because supply chains, distribution networks, and customer bases for so many American and multinational companies are in China and other countries affected by the virus.  Indeed, COVID-19’s genesis in China has already meant the shutdown of dozens of factories, shipyards, LNG terminals, and others.  The effect on U.S. businesses continues to grow.

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