For business owners, especially those dealing with the public, operating during a pandemic is a complicated situation. For the protection of customers, staff and your business, you need to follow CDC safety protocols that include measures such as requiring face coverings, limiting occupancy, posting instructional signage and using floor markings for social distancing. But in addition to protection from the direct exposure of the virus, company owners need to be aware of the indirect consequences affecting business insurance caused by COVID-19.
As the virus pandemic continues to hang on, it becomes more disruptive to business operations and could create additional liability exposure and complications regarding specific areas of business insurance. It is important that companies understand the potential exposures from COVID-19 and take precautions to limit their liabilities. The professionals at J.P. Perry Insurance see complications involving the following areas...
Liability Insurance Issues
If customers, guests, employees or vendors claim they became sick with COVID-19 due to your business negligence, that could call into question your company's General Liability insurance and your Directors and Officers (D&O) insurance. Would a virus actually be covered under these policies?
Workers' Compensation Insurance
Most state statues pay out benefits if a workplace illness is occupational in nature. Normally contagious diseases are excluded from Workers' Compensation policies. However, coverage may be paid if the illness arose during the course of the worker's employment duties. But this is not a straight forward conclusion.
Business Interruption
Typically, Business Interruption insurance is triggered by a direct physical loss or damage. But under this interpretation, contagious diseases like COVID-19 would not count as a covered loss. However, if COVID-19 contaminates a physical object, such as your company's HVAC system causing a business closure, then there could be an argument that the virus is covered. This is a controversial issue that is subject to interpretation and is being hotly contested in a federal court in Kansas City right now.
Contingent Business Interruption Insurance
Unlike traditional Business Interruption insurance that compensates the policyholder for a loss resulting from damage to its own property, Contingent Business Interruption insurance (CBI) allows businesses to transfer risk of certain loss to the property of a third party. This type of coverage is especially important for protecting supply chain operations. And with COVID-19 affecting businesses globally, all business locations could have to close down. Again, as with traditional Business Interruption insurance, the question must be asked is property damage needed to occur before coverage is allowed.
There are many questions regarding how existing insurance policies will cover COVID-19 claims. Policy wording is critically important and could make the difference when it comes to making claims. You need to review your policies for exclusions and endorsements to make sure you have the coverage you need. The professionals at J.P. Perry Insurance are available to review your existing policies, sort out the issues and help you take measures to control potential losses.