Does My Insurance Policy Provide Coverage for the CoronaVirus?

Will My Commercial Insurance Policies Protect by Business Against the coronavirus COVID-19?

COVID-19 or the coronavirus, a flulike virus that originated in Wuhan, China, has disrupted global supply chains and has American business owners wondering how the virus may impact their businesses. Will your commercial insurance policies cover you for the effects of this global outbreak?

Will My Commercial Insurance Policies Respond to an Outbreak?

The answer to this question, as in many insurance issues, is complex. Let’s review coverage by the different policies you may have.

General Liability and Property Insurance Coverage

Your general liability (GL) policy may cover you for third-party claims. For example, customers allege they became ill after a visit to your premises due to your failure to disinfect. In many cases, your GL coverage will respond. However, some GL policies have exclusions that limit or eliminate third-party coverage. Fear of illness by visitors absent physical symptoms, for example, probably would not trigger coverage.
If you incur cleanup costs, your pollution liability policy may provide some coverage. Most standard commercial property policies, however, usually have significant contamination exclusions.

The Effects of Business Interruption and Your Business Income Coverage

Absent special endorsements, most business income (BI) coverage applies only after the business experiences an income loss related to a peril covered under the policy. For example, BI coverage helps businesses that experience a loss of income after a fire. In the case of the coronavirus, it’s unlikely that coverage would apply without adding endorsements, when available, at an additional cost.
If you must close your business due to the virus, most BI policies respond only if the government orders the business closure. Additionally, the standard BI form excludes “loss or damage caused by or resulting from any virus, bacterium, or other microorganism that induces or is capable of inducing physical distress, illness, or disease.” The BI form also excludes a “loss of market.” This scenario could emerge for hotel owners who cannot fill rooms because people stopped traveling due to the disease.
However, hope for specific coverage has appeared on the horizon. The Insurance Services Office, which develops many of the coverage forms insurers utilize, offers two BI endorsements that could provide coverage if the government orders a quarantine. If your business depends on a property, you may have coverage. For example, you operate a restaurant in a hotel impacted by the lack of traveling customers, and you list the hotel as a “dependent property,” which can trigger coverage.

Workers Compensation Coverage

Under your workers compensation coverage, if an employee contacts the virus because of employment, coverage should apply. For example, a healthcare worker at your clinic falls ill after treating COVID-19 patients.

Employment Practices Liability Coverage

If employees allege you discriminated against them in handling the illness, your employment practices policy probably would respond. One of the issues to consider is how to manage an employee’s return to work after he or she contracted the coronavirus or was a caregiver for someone ill with the virus. The Centers for Disease Control (CDC) offers some COVID-19 guidance for how to manage these employment issues.

Proactive Risk Management Highlights the Need for a COVID-19 Response Plan

Ensuring you take steps to manage a crisis before it hits your business is the key to effective risk management. Document the steps you can take to manage problems before they arise. This proactive approach is essential to successfully defending yourself in the event of litigation. The CDC has basic “interim” COVID-19 guidelines on its website. We stress the word “interim” because the coronavirus repercussions change almost by the hour. Once you’ve developed and implemented a basic COVID-19 response plan, you’ll need to update it if circumstances change.

Working with Your Insurance Broker in Uncertain Times

From the travel industry hit by fewer foreign tourists to retailers facing supply chain disruption, many US businesses are beginning to experience disruption from the coronavirus COVID-19.
In times of uncertainty, a solid relationship with your insurance broker can help you manage even the most difficult adverse events. Whether hit by supply chain disruption from a significant slowdown in foreign exports or concerned about sick employees, American businesses face a challenge in the coronavirus. Your insurance coverage is one area where you rely on outside expertise.
With Fidens Insurance Brokerage, we’re not just your insurance broker; we’re your risk management partner. If you’re concerned about how your insurance coverage might respond to this outbreak, contact us for more information.