Will Your Business Insurance Policy Cover Losses Due to Covid-19?
March 18, 2020
Coronavirus and Insurance Policies: What Is Covered?
Declared a global health emergency by the World Health Organization, the evolving Coronavirus is spreading geographically, and its impact on businesses is also spreading.
How will this outbreak affect your business? Better yet, how will your insurance policy respond to losses incurred as a direct result of this virus?
If an employee alleges that they contracted COVID-19 while at work, this may result in a compensable workers compensation claim but the likelihood of a successful claim would be very fact-specific. Workers compensation is a no-fault system, meaning the employee does not have to prove negligence on the part of the employer. The employee must only prove the injury occurred at work and was caused by their employment.
Business Interruption Insurance:
The majority of property insurance policies include coverage for business interruption losses or in a simpler term- loss of income. However, business owners should note that this loss is triggered when the policyholder sustains a direct physical loss or actual property damage from a covered peril. The insurance industry is currently commenting that Covid- 19 does not establish physical damage and therefore does not trigger coverage.
Risk Management/ Best Practices:
Employers should take steps to create a safe, compliant work environment. A written plan/policy is a great start! It is important to create guidelines to address particular situations with your employees. There are many resources available. CDC & OSHA each offer some great strategies and advice for protecting your business, employees, and yourself during this crucial time.
This is a very fluid situation and is new for the insurance industry. Government and/or court actions can dramatically change the insurance environment. For this reason, business owners should keep good records of their business interruption losses if they experience any. As well, consistent communication with your insurance broker in the days/weeks/months ahead is extremely important.
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