As companies navigate the COVID-19 pandemic, they should take stock of existing insurance policies that may provide coverage for:
- damages and losses suffered by the company, or
- potential liability of the company.
What Type of Claims Could Arise?
While this pandemic and the government response is unprecedented, your business may encounter several issues giving rise to a claim under one or more types of insurance policies. Examples of these issues and the types of insurance that may provide coverage are:
- Slowdown or stoppage of business
- Property insurance with business interruption (BI) or “civil authority” coverage (review carefully, many policies will require actual physical damage to property before BI coverage is available)
- Supply chain risk or trade disruption insurance
- Contamination to business property
- Pollution or environmental insurance
- Commercial general liability insurance with pollution/environmental coverage
- Personal injury, and third party property damage, claims against the business (e.g., alleged negligence leading to virus exposure)
- Commercial general liability insurance
- Errors & Omissions liability insurance
- Pollution or environmental insurance
- Employee claims against the business
- Workers’ compensation insurance
- Employment practices liability insurance
- Losses or expenses caused by cybersecurity breaches during work-from-home operations
- Property insurance
- Cyber insurance
Policy language varies widely, so there are no universal answers about whether a COVID-19 related issue will be covered. Some policies will have exclusions for contamination, pandemics, bacteria or viruses, or the exercise of “civil authority.” Policies must be read as a whole. It can be difficult to decipher when a coverage or exclusion applies. A good place to start is your insurance broker (who can help you obtain a copy of the complete policy) or an attorney.
What Can I Do Now to Prepare for Potential Claims?
Keep detailed records of everything that affects your business and steps that it takes. Keeping a timeline of events will be very helpful. For example:
- Document when employees or customers report symptoms or a positive coronavirus test;
- Note especially the extent to which employees or customers were located on the premises while potentially contagious;
- Document any additional cleaning or preventative measures;
- Track payroll and all other expenses related to COVID-19;
- Document the dates and reasons for any changes to your operations, i.e., policy changes, hours of operation changes or closures (whether voluntary or government-mandated):
- Make copies of any government orders mandating your closure, etc.;
- Keep any pre-outbreak business plans or forecasts and carefully track actual performance.
What Should I Do If I Believe I Have a Claim?
- Do not delay. Notify your insurer and broker as soon as possible of a claim or potential claim.
- Cooperate with the insurer’s reasonable requests for documentation and information about the claim.
- Make the insurer take a position to either accept coverage or deny the claim.
- If the insurer denies a claim, consult an attorney about your options.
