Potential Insurance Coverage for COVID-19 Losses

March 26, 2020
Closed sign, business closure

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.

Brooks Pierce is dedicated to keeping our clients fully informed during the COVID-19 crisis. For more information, please visit our COVID-19 Response Resources page.

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