As the world continues to fight the spread of coronavirus, many companies and organizations are looking for ways to maintain operations while minimizing losses as much as possible. But even as this happens, questions continue to arise as to whether insurance would cover losses caused by this pandemic.
Unfortunately, there’s no straight answer to this. It depends on a lot of factors, including the terms and conditions of your policy as well as the type of loss. Below you’ll get answers to some questions you might have about insurance and COVID-19.
Let’s get started:
1. Will My Workers Compensation Policy Cover Losses Arising from Employees Working from Home?
Under normal circumstances, for a loss to be covered under a compensation insurance policy, it must be proved that the employee suffered the loss while carrying their employment duties. Unfortunately, this might be hard to determine in the event of a virus outbreak. What would happen to employees working in high-risk areas or those traveling in those areas?
While most companies are allowing employees to work from home, some will still be required in the office. Will those employees going to work still be considered as those traveling into high-risk areas?
The good news is that most insurance companies are likely to settle claims arising from employees commuting to work under such conditions. Employers in the United States should seek advice from workers’ compensation laws.
2. Can I get Professional Liability Coverage After a COVID-19 Loss has Occurred?
As you may know, professional liability coverage protects professionals, for instance, lawyers, accountants, physicians, etc. against claims from their clients due to negligence. Since general liability insurance does not cover losses due to malpractice, negligence, or misrepresentation, most professionals will need this type of insurance.
The professional liability policy can help cover claims in the event you’re sued. It may also protect you if you’re alleged to have exposed a person or a group of people to the coronavirus.
However, since you cannot get coverage for a loss that has already happened, it is not possible to get professional liability coverage after a coronavirus related loss.
Insurance companies are unlikely to pay for a loss due to an event that occurred before the policy was initiated.
3. What If I Close My Business Temporarily? Will My Income Policy Protect Me?
Unless your business has suffered physical damage due to COVID-19, you’ll probably not get protection from your business income policy. Most business income policies will not consider a loss due to a virus or bacterium as a covered peril, unless it’s specifically mentioned in the contract.
Your business income forms part of a property policy that would cover a loss due to a covered loss. This policy will come in handy if, due to property damage, you’re unable to continue with business operations. Your income policy will offer a lever of reimbursement according to your policy.
4. What If I Close My Business After a Government Directive Due to the Pandemic?
The government might indeed order most businesses to close due to coronavirus outbreak. However, your policy will not cover you against this unless it has caused direct damage to your property or the buildings nearby.
5. Will I Be Compensated for Unexpected Travel Expenses Due to Coronavirus?
Most companies have been forced to cancel or even book new tickets to evacuate employees from high-infected areas. These were all unexpected travel costs that could impact normal business operations. Whether or not these itinerary changes will be covered depends on your specific policy.
Since coronavirus and other communicable diseases are not related to a covered peril, most policies are unlikely to cover them.
Some event policies, however, will cover loss due to event postponement. But keep in mind that this coverage will need to be in place before the outbreak.
So, What’s the Way Forward?
Depending on how long the pandemic will last, you may be required to keep it in mind when renewing your insurance. Think carefully when positioning your risk with underwriters while being cautious of the changing market conditions due to an outbreak.
As much insurance is designed to be complex as possible, risk mitigation is necessary especially due to limitations involved in risk transfer.
Planners and risk managers should consider the advisories from the world health bodies. They should be aware of the underlying issues and address things affecting the wellbeing of organizations, their employees, and their assets. This way, they can reduce the likelihood of unpleasant outcomes.
Issues from external environments such as COVID-19 should be a wake-up call to businesses to review the impacts they can have on organizations.
