At W.E. Davis Insurance Agency, we are very concerned about the issues surrounding the Coronavirus. Our clients’ and friends’ well-being is our most important concern. We hope you will take the advice of our elected officials and medical leaders who are directing the efforts to control the spread. Below is our interpretation of coverage under a business insurance program.
Commercial Insurance Policies and Loss of Income
Most commercial insurance programs have a Business Income coverage part. This is designed to provide protection in the event of a fire or other physical damage to an insured location and you lose income when customers cannot come in to buy your products or services. Generally, this coverage does not cover situations where your location is not physically damaged. i.e. – quarantines, people not coming for reasons beyond your control. This is a considered a “business risk” that all business owners retain. Economic downturns prompted by governmental actions cannot be foreseen by insurance companies so they can not properly price for that type of loss. Thus, it is excluded along with other types of losses like nuclear, war or military action.
Some attorneys are taking the approach that the virus itself causes property damage. If the courts agree there may still be problems trying to receive a claim check. The issue is how long will it take to fix the damage? Well, for most businesses, they would simply have to wash and disinfect the space. That generally would not take very long and most Business Income policies have a 72 hour waiting period before coverage begins. The property could be cleaned before the waiting period is up.
Where can I get Loss of Income coverage?
The only type of coverage we are aware of that might provide business income loss due to a virus is in the special event and hospitality industries. Large events / venues and hotels can purchase insurance that covers many kinds of business income loss, including illnesses. However, even these policies may contain exclusions regarding loss of income due to the “fear” of something happening.
What if someone gets the virus and becomes ill?
Health Insurance – The first thing one should do if they believe they’ve been exposed or become ill, is contact their personal physician. Of course, if it seems more serious, our hospitals are gearing up for an influx of patients so go to the ER if you believe your situation is more serious. In terms of insurance, your specific health insurance policy should cover expenses surrounding the virus. You may need to get prior approval for certain procedures, so be sure you make contact with your carrier. Testing should also be included if medically necessary. Again, check with your insurance carrier for specifics.
Workers Compensation – If an employee believes they became ill at work, Workers Compensation could respond. You should turn in a Workers Compensation claim to be sure, but the issue will be where the employee was exposed and if not at work, Workers Compensation would not apply.
General Liability – If a member of the public (like a client) gets ill from the virus and believes they were exposed at your business, they may try to sue you to collect for damages. If this happens, General Liability insurance might respond. However, these policies all contain a Pollution exclusion and the carrier may consider a virus/bacteria as a pollutant. Other policies might be even more specific and name “virus” as an exclusion.
Professional and Errors and Omissions Liability – If you are a professional (Doctor, Nurse, Accountant, Lawyer, Architect, Engineer or even Insurance Agent) you should have this type of coverage to protect your professional activities. Doctors and Nurses need Malpractice coverage for improper treatment or mistakes in care while the other types of professions need coverage for their advice and counsel. If a lawsuit alleges improper advice that led to a financial loss, coverage might respond. However, there are many exclusions and most exclude the release of Pollutants. (See General Liability above)
Directors and Officers Liability – D&O liability protects an organization from lawsuits that allege improper decisions made by the board that cause financial loss. However, most D&O policies exclude Bodily Injury so it is unlikely these policies would respond to suits alleging illness caused by a virus. The allegation is important so it is impossible to have a general statement regarding coverage for D&O claims.
We are happy to review your specific policy with you to go over the coverage you have. If you believe you have a covered claim, the only way to be sure whether your insurance provides or excludes coverage, is to turn in a loss. We are happy to help you through the process. In addition, we attach an article that provides more details about the specific types of coverage under commercial property insurance and how it might respond to a claim made regarding the Coronavirus.
We wish you the very best in these difficult times.
Disclaimer – The W.E. Davis Insurance Agency, Inc. is an Independent Insurance Agency serving their client’s insurance and risk management needs in Ohio and throughout the mid-west. This article is designed to provide basic information and is not providing legal advice. Please consult your insurance agent and/or attorney in determining whether or not to file an insurance claim.