Does my insurance cover business losses from Covid-19?
Is your business is experiencing slowing revenues due to the coronavirus? You might be asking this question, “Does my insurance cover business losses from Covid-19?”
Under General Liability? Unfortunately, there’s not much direct relief in the general liability insurance policy since general liability coverages for the most part deal with damages to a 3rd party as a result of your actions. If you have a property policy, that policy generally provides coverage to you for your property loss, some property policies also provide coverage for a “business income loss.”
Under Property coverage? In the past, various insurance carriers were forced into paying loss of business income claims after the 2003 SARS outbreak. The insurance companies never intended to pay those types of business income losses, but since the business income coverage didn’t clearly exclude “infectious disease”, in some cases the insurance companies had to pay the business income claim. Since then many of the largest insurance companies have put “infectious disease exclusions” into their property policies. If the business loss is due to an infectious disease outbreak there wouldn’t be any coverage for lost business income if infectious disease is excluded. Check your policy, infectious disease will most likely be excluded.
Under Workers’ Compensation? Does my workers’ compensation policy cover my employees if they get sick from Covid-19? One thing to remember about work comp is that the coverage is no-fault, which means an employee only needs to prove that the injury arose out of, and in the course of, employment. The virus isn’t an injury, so it would fall under the occupational disease portion of the work comp coverage. Generally, to fall under the occupational disease the employee must show two things:
1) The illness or disease must be “occupational,” meaning that it arose out of and was in the course of employment; and
2) The illness or disease must arise out of or be caused by conditions peculiar to the work, and creates a risk of contracting the disease to a greater degree and in a different manner than in the public generally.
Generally speaking, if the employee is involved in an activity that benefits you, the employer, then the employee may be considered “in the course of employment.” If the employee catches the virus in the course of employment then the work comp policy could potentially provide coverage. Point number 2 above would also need to be considered, which may exclude coverage for a virus that is affecting the general public, unless your specific job puts you at greater risk than the general public – think health care worker. Work comp claims are handled individually and coverage depends on the specific circumstances involved in the claim.
We will have to see if any state legislation arises from the outbreak that requires more evidence that the employee contracted the virus in the course of employment, or during the employee’s “free” or “down time.”
All of this is to help you understand what responses you might anticipate from insurers, but that should not stop you from making a claim. There are many variables at play here, and we don’t yet know how insurers will respond to this crisis, and how external pressures, like political or legal influences, will help shape the industrys’ responses during this crisis. If you have had a loss related to this, you should consider submitting a claim to your relevant policy.
If you have an insurance question that you’d like answered please feel free to email me and I’ll be glad to start a conversation.
About the Author
Jon Brockway is a Certified Insurance Counselor with over 18+ years of experience and a lifetime of working with contractors. He is passionate about helping businesses make the best decision for their insurance needs.
He can be reached at JBrockway@eclipseinsurance.com
