Bed bugs are quickly becoming the bug du jour. While some media reports have anointed Cincinnati the “Bed Bug Capital of the U.S.,” others have given the honor to New York City. Regardless of which city is more infested, the consensus is clear – the small insects known as Cimex Lectularius are attacking people globally.
In the U.S., the standard homeowners and renters insurance policies do not provide coverage for the cleanup of bed bug infestations because bed bugs fall under the scope of the policies’ vermin exclusion. In New York, however, legislation has been proposed that would require property and casualty insurers to include bed bug coverage as an option for policyholders within the state. It remains to be seen whether the legislation will be enacted or whether other states enact similar legislation.
Business interruption policies, however, might provide coverage for losses resulting from a shutdown due to bed bugs. We have already seen movie theaters, hotels, and retail stores that were forced to close to rid their premises of bed bugs, and we will see more in the future, creating potential business interruption claims. The monetary damages because of these shutdowns can be substantial because the cleanup process is time-consuming. Spraying of insecticide alone does not usually kill all the bed bugs in a building. Bed bugs hide in the seams of mattresses, cracks in dressers and other furniture, behind wallpaper, and in or under other objects. Unlike other insects, they can continue to hide for long periods of time because they can live up to eighteen months without eating. While some business interruption policies may provide coverage for a bed bug cleanup, others policies do not, depending on the specific language in the policies. For example, under some business interruption policies that require a “direct physical loss of or damage to property” in order for there to be a covered cessation in business, bed bug infestations may not lead to covered claims.
We may soon see insureds demanding additional cover from their business interruption insurers so that they have coverage for future losses because of bed bug infestations.
