There is no denying the COVID-19 pandemic has caused unprecedented damage to the global economy. In essence, the pandemic has caused universal event cancellations, remote officing, slowdown of deliveries, cancellation of orders, and a total disruption of the supply chain.
Undeniably, the impact of the pandemic is felt in almost all industries. The entertainment, transportation, hospitality, travel, education, health care, manufacturing, and event planning industries have been especially hit hard.
In recent years, many insurance providers have cut back on coverage for pandemic diseases, introduced broadened exclusions, and applied strict sub-limits to contain insurer exposure. Ideally, it is recommended that you assess your business's vulnerabilities and your insurance coverage to effectively address future losses.
A lot of businesses consider business interruption (BI) insurance as a freestanding policy or an integral aspect of their first-party property insurance. BI coverage protects against losses that are the result of suspended operation due to property damage.
Often, contagious diseases will not constitute property damages when they are passed from one person to another. Actual contamination of tangible property includes property damage for insurance purposes.
In the same manner, contamination in HVAC systems helps to constitute such property damage. If your business is forced to shut down your assets and facilities due to actual contamination, BI coverage may be used.
However, there may be crucial limitations. For instance:
In recent years, specifically in the aftermath of the SARS epidemic, many insurers added an exclusion for viral or bacterial infections to their coverage. There are also combined bacteria/virus exclusions and stand-alone bacterial exclusions.
It is also possible for insurers to argue that the standard pollution exclusions may apply to BI coverage. Whether bacteria or viruses are considered pollutants is still a controversial question that has no set rules yet.
Many policyholders face a risk of liability if they fail to protect others from infection exposure while on their premises (i.e., general contractors, engineers, plumbers, etc.). Providers of transportation, hospitality, health care, and retail services are considered especially vulnerable.
The general liability policies cover liability for property damage and bodily injury. Commercial general liability policies, on the other hand, usually provide legal defense against such claims.
Companies can also face claims for losses that will not involve property damage or bodily injury. Some companies or their businesses can also face claims for financial losses stemming from their pandemic response's mismanagement. If anything, it is crucial to be aware of the risks and have a clear understanding of the relevant insurance scope.
Workers' compensation insurance covers employees who contract an illness or suffer from injuries in the workplace. This also covers injuries that arise out of or in the course of employment. In other words, compensation claims must allege work-related losses.
Coverage based on "work-relatedness" is analyzed based on the time the loss occurred, the place where it occurred, and the particular activity the claimant was involved in when the loss took place. The specific nature of the loss is also taken into account.
When assisting employees with workers' compensation claims, it is critical to note the place, time, and circumstances of the exposure. However, there are also employment-related claims that may not be covered by workers' compensation insurance.
Most businesses purchase contingent business interruption (CBI) insurance or supply chain insurance to protect themselves against possible losses caused by supply chain interruptions.
CBI insurance typically covers economic losses from reduced or lost operations resulting from physical damage on an unnamed or named supplier's premises. Some CBI policies and supply chains may also cover the loss of services.
The best time to prepare for exposure to infectious diseases is before they happen. This should include meticulously taking stock of the risk pathways and figuring out the insurance coverage that may be suitable for your business.
About the Author
Rachel Porter is the content specialist for Custom Contractors Insurance, LLC, an Arizona roofing and contractors insurance company. When not writing, she enjoys reading and mountain biking with her friends.