This document, blog post and or video are not intended to provide any legal advice or opinion on any individual situation and should not be relied on to determine insurance coverage or lack thereof as relates to Coronavirus or any other cause of loss. Insurance policies, forms, and endorsements vary based on the insurance companies, changes in edition dates, regulations, court decisions, state and federal regulations, and state jurisdictions. Since each potential claim is unique, Iscential cannot make any representation or warranty as to the applicability of the information to any particular claim, which is dependent on the facts, policy, and laws governing the claim. Please contact our office if you want to submit any claim for coverage with your insurance companies.
Do my Business Insurance policies respond to losses caused by the COVID-19 virus?
Business Interruption/ Loss of Use/ Civil Authority
With the coronavirus spreading across the world and the United States, many businesses are looking for guidance on how to navigate these difficult times. As advisors, we would like to share our point of view on this subject. The unprecedented nature of the situation means that regulators, courts, and insurance carriers may interpret policy language and existing laws differently. Please seek counsel from your attorney and insurance advisor for your individual situation.
We would advise you to be careful as there are countless policy forms, endorsements, and exclusions offered by varying insurance companies. We urge you not to rely on the media or your friend’s opinion on how your policy will respond.
You should look through your own policy to determine if you have coverage, in doing so the following keywords may be helpful in your search:
- Business Interruption
- Loss of Use
- Direct Physical Loss or Physical Damage
- Civil Authority
- Endorsements (Virus)
- Exclusions (Contamination)
- Exclusions (Virus or Bacteria)
Many businesses located in affected areas are experiencing loss of income due to the government-imposed restrictions. Because of this, many business owners will look to their Business Interruption and Civil Authority insurance to respond. In our opinion, many standard insurance policies are unlikely to provide coverage for business interruption caused by COVID-19.
The reason for this is that for both coverages to apply, there must be direct physical damage to the insured’s location. Furthermore, most policies likely contain exclusions for contamination, virus, and bacteria.
Below are some examples where coverage would likely be afforded when a Business Interruption or Civil Authority claim is filed. These include:
- Business operations are interrupted and/or disrupted by fire.
- Business operations are interrupted and/or disrupted by a natural disaster causing damage to your location.
- Business operations are interrupted and/or disrupted by a sudden and accidental plumbing leak.
Commercial General Liability
General liability policies provide coverage for injury to persons (other than your employees) and damage to property of a third party for which you are legally liable. Liability for such injury or damage involving COVID-19 or a similar health emergency will arise chiefly out of a failure to protect others and their property against exposure to infection. Many general liability policies have exclusions that most likely prevent coverage for this kind of infection. (Communicable Disease Exclusion)
Careful examination of the policy’s coverage terms, conditions and exclusions will be necessary to determine if such a limitation applies to you. Please advise our office if you want to submit any claim for coverage with your insurance company
Worker’s Compensation
As more people become sick from COVID-19, many may try to turn to their employer’s worker’s compensation policy for coverage. There are several issues that could make it difficult to find coverage on this policy.
- First, a typical worker’s compensation policy has an exclusion for infectious diseases as well as the condition that for a disease or injury to be covered an employee would’ve had to contract the virus at their place of work while in the course of their work.
- Second, contracting a virus at work is typically not enough to trigger the assertion that it is a compensable occupational illness. In most cases, we understand that COVID-19 is no more an occupational disease than the flu.
There are certain situations where coverage may be considered. They include:
- Does the employee have an increased risk of contracting the virus due to the peculiarity of his or her job? (Grocery store clerk)
- Health Care Workers
- Employees traveling outside the country for business
Iscential will continue to monitor ongoing developments related to the coronavirus (COVID-19), please know that nothing will compromise our commitment to take care of customers like you and the things you trust us to insure. We remain available to provide the same level of service you have come to expect. Please advise our office if you want to submit any claim for coverage with your insurance companies.
For further assistance and help navigating your business through COVID-19 head to the Small Business Administration’s website here to find what resources are available for your business.
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