Below is are responses to some of the common insurance related question we have received regarding COVID-19. We are continuing to monitor the situation and are here as a resource to answer insurance related questions.
Will Business Income & Extra Expense Apply?
“Business Interruption” coverage attaches to your property coverage form. This coverage essentially pays your loss of net income in the event that a property loss causes you to shut down operations. The key words in the form are that it requires a ‘direct physical loss’ by a covered peril to your property. This should be the cause of the shut down.
What If There Is A Government Seizure?
If the government were to seize or destroy (or order destroyed) your property as the result of the virus, it is unlikely that coverage would apply. There is a specific exclusion in the Business Interruption form for this type of event. There is a small amount of Business Interruption coverage available as a coverage extension for shut-down due to order of a civil authority. That extension requires (among other things) that there be a covered ‘direct physical loss’ somewhere other than your location which causes the authority to prohibit access to your premises.
Does Workers Compensation Apply?
If an employee becomes infected with COIVD-19 at work, it is unlikely that workers compensation coverage would apply, but it could. This may vary by state. In Minnesota, it would have to be shown that the illness was caused due to an occupational hazard or arose out of the work environment.
Will My General Liability Coverage Respond If I Am Held Responsible For The Spread Of A Virus To A Third Party?
If a guest were to contract (or allege to have contracted) the virus while at your premises, General Liability should cover this. It will defend you and ultimately pay out if it is found that you are responsible. The defense would likely question the proof as to whether a) it was contracted at your premises and b) whether you are negligent. The question of a guest or employee spreading it to other people and your business being sued as a result should also be covered.
Are There Coverage Options For An Event Like This?
Some specialty policies will offer very limited coverage that may apply in this kind of an event. It is called “Crisis Management” coverage. It is designed to help with things like loss of business income & expenses to reestablish public image after a crisis event. These forms offer smaller limits of coverage (IE.. $50,000 etc) and only sometimes will attach to such policies as Employment Practices Liability, Directors & Officers Liability, Cyber Liability, Specialty Crime & package policies that provide packages of these coverages.
This is not meant to discourage a business from filing an insurance claim. Coverage forms vary by carrier. If you have a claim related to COVID-19, we can help with the filing process. It will ultimately be up to each carrier to determine whether coverage applies.