There are lots of circumstances that can lead to the interruption of your business from Coronavirus.  Was your premises infected?  Was a key employee infected?  Were you forced to close by a governmental agency for quarantine?  Was your whole area quarantined?  The answer to how your business insurance responds depends on your exact circumstances.  Only the insurance company can make a determination of coverage.  I can help guide you with my understanding and interpretation of your policy language, but the only way to know for sure is to submit a claim to the insurance company to get their response. 

With that said, most Property & Casualty insurance policies have either an “Acts of God” type of exclusion, a Virus & Bacteria Exclusion, or a Governmental Action or Civil Authority Exclusion or Limitation, or a requirement for direct physical loss to your property.  I’ve been fielding this question a lot lately and reading a lot of clients’ policies.  What I’ve found is that one or more of these exclusions is on every policy I review.  This appears to be the type of catastrophic risk that insurance companies are unable to bare and has therefore been excluded from every policy I’ve reviewed.  There are two areas of coverage where there may be some coverage.  The first is General Liability.  General liability protects your company for Bodily Injury caused to others on your premises or through your products.  If your business turned into a transmission point infecting your customers and your injured customers sued you for their injuries or deaths, the General liability policy may respond.  Many General liability policies contain a Virus and Bacteria exclusion that would void coverage, but some do not.  This is one possible area of coverage.  The other potential coverage is Workers Compensation.  If an employee contracts Coronavirus at work due to their working conditions then coverage may apply.  Again, it will depend on the individual circumstances.  Proving eligibility for Workers Compensation for an occupational disease is not easy, but depending on the conditions it is possible.  If coverage applies then the employee’s medical bills and lost wages would be covered subject to the policy terms & statute. 

Most business owners I speak with are concerned with their loss of revenue and how that impacts their ability to pay their employees, continue their operations, and compensate themselves.  The insurance industry just doesn’t have the capacity to backstop the entire US economy in the case of a pandemic.  The closest parallels I can draw are Terrorism Insurance and Flood Insurance.  These risks are so catastrophic and so unpredictable that the insurance industry can’t underwrite them so you buy terrorism insurance and flood insurance from private insurance companies, but the claims are backed and in some capacity paid by the Federal Government.  The origin stories of both flood insurance and terrorism insurance are similar.  We had terrible events happen, the government came in to make the victims whole, and then the government designed insurance programs around them because only the government had enough money to pay the catastrophic claims.  I sincerely hope it’s not, but this could end up being one of those circumstances where the Federal Government has to act and we may look back at this event as the beginning of a program similar to NFIP or TRIA (Flood or Terrorism). 

The best thing to do right now is to manage this risk.  Risk reduction can go a long way.  Some suggestions include:

• Eliminate all unnecessary meetings or travel.  Attend virtually when possible.
• Encourage your staff not to come in if they don’t feel well.  If you don’t offer paid leave, it might be a good idea to consider it at least temporarily so sick employees are less tempted to come to work.
• Offer remote work to employees when possible.
• Have all employees and patrons wash or disinfect hands immediately upon entry to the premises. 
• Clean commonly touched surfaces regularly.
• Notify your customers what steps you’re taking to keep your premises safe.  Display your plan at your premises and distribute it through the methods you have such as email, website, social media, etc.
• Have a plan for when the virus reaches your business.  How will you notify employees?  Do you have everyone’s cell phone numbers &/ personal email addresses ready?  The US Chamber of Commerce has a great resource for business planning related to Coronavirus: https://www.uschamberfoundation.org/coronavirus
• Encourage employees to practice risk reduction strategies in their personal lives as well by sharing educational material with them so they may be encouraged to reduce their exposure to outside sources of the virus.  This page also includes a good resource for employee education: https://www.uschamberfoundation.org/coronavirus

If you have questions about this or any other topic, we are always here to help.  Please contact us today.

Kevin DiPetrillo
President
Southern Insurance Advisors