“How might my insurance policies respond to the hazards of Coronavirus / COVID-19?” – Insurance coverage may be found under different policies depending on the circumstances.
Property Insurance / Business Interruption
- The coverage trigger under a Property / Business Interruption policy is a direct physical loss to one of your locations, e.g., a fire to a scheduled / covered building that leads to an interruption in your business activities. Unfortunately, claims arising out of a non-direct physical loss, e.g., communicable disease, government shutdown, inability to access a port, etc. will most likely not trigger coverage under your property policy. As such, companies should focus on contingency planning, rather than relying upon insurance.
- Some Property policies have coverage extensions or sublimits for Decontamination Costs, Spoilage, Civil Authority and Ingress/Egress and Contingent Business Interruption. With these additional coverages, loss of income is usually contingent on the same coverage trigger under Property / Business Interruption, i.e., a direct physical loss arising from a covered peril.
Key takeaway – coverage for COVID-19 exposure is unlikely under a Property / Business Interruption policy.
Workers’ Compensation and Foreign Voluntary Workers’ Compensation Insurance
- For coverage to apply, affected employees would need to demonstrate that (a) the illness is “occupational” (i.e., directly arose out of their employment or work environment) and (b), arises from conditions that are “peculiar” to their work (i.e., almost exclusive to employees in a particular occupation or work environment).
- Additional repatriation and medical assistance coverage may be available under a FVWC policy.
Key takeaway – medical expense or lost work arising out of COVD-19 exposure is covered under Workers’ Compensation only if it can be determined that the illness is both occupational and peculiar to the work. Meeting these criteria may be difficult.
Business Travel Accident Insurance
- A typical BTA policy provides out-of-country medical assistance for sickness or injury, if an insured is traveling on business outside his or her home country.
- Currently, most BTA policies do not exclude communicable diseases. Note it’s possible that BTA insurers could add a Coronavirus exclusion to policies being placed and/or renewed in 2020.
- Travel cancellation costs are not typically covered under a BTA policy, but trip insurance options may be considered from airlines and other sources.
Key Takeaway – Most BTA policies provide medical assistance for sickness, including communicable diseases like COVID-19 incurred while traveling for business. Note – check your policy as exclusions vary and it is possible new ones will be added for COVID-19.
Event Cancellation Insurance
- This is coverage for specific, scheduled events that get cancelled and/or delayed due to forces beyond the insured’s control (e.g., venue closed by the order of a government authority due to an unsafe condition there).
- The carriers that write these types of policies are all adding a blanket COVID-19 / Coronavirus exclusion. If this is the sole reason you are looking at this type of policy, then it does not make sense to pursue coverage.
- They are quoting coverage for other specified cancellation causes, including communicable disease, but specifically excluding COVID-19.
Key Takeaway – Event Cancellation should be considered for any major corporate event; however, at this time there is no coverage under these policies for COVID-19 exposure.
The above referenced policies were selected because they are the most relevant to the COVID-19 exposure and the most asked about by clients. It’s possible that other insurance policies may also come into play, e.g., Cargo, Stock-Through-Put, General Liability, Directors & Officers Liability, Employment Practices Liability, etc. Please contact your Diversified Insurance team if you would like information pertaining to your specific insurance program and if you have any additional questions.