Posted by Mike Arnold, Commercial Lines Insurance, March 25, 2020
The following is intended to provide high-level information regarding your business insurance as it relates to the COVID-19 pandemic. It is intended to help educate and inform but is not a coverage determination. Your insurance carrier will review the facts of your loss and make a coverage determination.
Insurers have requirements on when a claim needs to be turned in. If you believe your business has suffered a loss due to COVID-19, please contact us or your insurance carrier as soon as possible so that a claim can be made.
Common losses associated with novel coronavirus (COVID-19) include:
- Business Interruption
- Lost Revenue or Income
- Third-Party Liability Claims from Covid-19 Related Lawsuits
- Supply Chain Disruption
- Civil Authority Blocking or Restricting Access
- Employment Related Lawsuits
- Directors & Officers Claims
- Event Cancellation
- Workers’ Comp
Most commercial insurance policies include coverage for loss of business income. Coverage for business income is commonly a part of your Property policy form, and the trigger for coverage is almost always tied to “direct physical loss or damage” or a variation of this language. Coverage is typically limited to “during the period of restoration” meaning the time necessary to repair, clean, or disinfect your property. Loss of market, loss of opportunity, or delay are typically not covered under Business Income policy forms.
That being said, coverage will not only depend on the wording in your policy but also the facts of the loss. In addition, you may see specific exclusions for virus or communicable disease. We recommend the following steps be taken even if you are unsure whether your business has suffered a loss:
Document, document, document. If you haven’t already, start gathering all documents, emails, government mandates, lost sales, and internal decisions. All insurers will require documentation so starting that process now, creating a timeline will help prove your claim.
Typically, insurers will ask for:
- Historical sales
- Actual sales during the pandemic
- Forecasting models before, during, and after pandemic
- Production schedules
- Historical and current inventory reports
- Extra expenses incurred to reduce your loss or suspension of operations
- P&L statements
- Ongoing expenses such is leases, memberships or subscriptions
For workers who contract the virus while on the job or believe they contracted the virus while on the job, it is possible Workers’ Compensation coverage will apply. In Washington State, claims can be filed through Washington State L&I. Business outside of Washington and which are not monopolistic states, coverage is provided by a variety of carriers. Please contact firstname.lastname@example.org or your Workers’ Comp insurer directly to discuss filing a claim.
Employment Practices Liability
Employers are at risk for EPL suits based on their response to COVID-19. EPL policies typically exclude bodily injury, sickness, disease, or death. Employers may see suits claiming:
- Allegations of discrimination against employees deemed ‘at risk’
- Allegation of retaliation
- Breach of Employment Contract
- Third-Party EPL suits from clients or vendors
Directors & Officers Liability
Typically, D&O policies do not cover bodily injury, sickness, disease, or death. However, there has been an increase in event-driven claims and employers could see suits alleging mismanagement of the COVID-19 crisis.
Though the impact to retirement savings plans is uncertain, allegations of acts, errors, or omissions in the implementation and administration of employee benefit plans could result from COVID-19.
Media has already reported an increase in phishing/social engineering attacks, ransomware, and other cyber related attacks. IT departments must continue to be diligent and employees need to be reminded to review attachments before opening, clicking on links, and attempts by criminals posing as someone else requesting information, money or other assets. For more info: Cybersecurity and Infrastructure Security Agency Guidance.
If you have any specific questions or concerns, we are here to help. Please contact your TPG Account Executive, Account Manager, or email@example.com.