• Tamir Zuckerman

COVID-19 – Is your business covered?

Over the past few weeks, we have entered uncharted territory.

The unfolding series of imposed and self-elected quarantines are unprecedented in modern history.

They reflect a prudent approach to trying to slow and to the greatest extent possible, limit, the spread of COVID-19. The follow-on effects of these quarantines and the public sector response to the pandemic are likely to be significant.

The disruption to business and everyday life caused by the coronavirus (COVID-19) pandemic is resulting in an economic impact for businesses. With hourly announcements from health agencies calling for social distancing, school closings, business restrictions, and event cancellations, current news reports indicate the crisis will get worse before it gets better. Much of this disruption is likely not covered by insurance.

The two most asked questions I’ve received over the past week have been:

Where can my insured buy coverage for the COVID-19 viral pandemic?

Does my insured have coverage under their current policy?

Please note this is not an interpretation of any policy language and the recommendations are that insureds consult with counsel for specific interpretation and advice on their policy.


Currently, there are no markets that will provide new coverage for losses resulting from the COVID-19 pandemic, including all Non-Physical Damage Business Insurance or Parametric products.

Are you covered under your current Property policy? The short answer is no; current policies likely will not provide coverage. Property policies are triggered by physical loss and/or damage to the insured property. Since the virus is not a covered peril nor does it cause direct physical loss or damage to covered property, carriers will likely say no cover. Property policies can cover fortuitous events, but this event is generally excluded under standard policy exclusions. Most policies contain a contamination exclusion which includes virus, disease or illness-causing agents within the definition of contaminant. ISO policies, specific carrier forms and most manuscripts do not cover losses resulting from virus.

This is relevant to Time Element coverage as well. However, if there is coverage, it is most likely on a policy for hospitality or retail under “Loss of Attraction,” “Communicable Diseases” or “Special Perils Business Interruption.” These extensions are generally applicable to extra expenses, are sub-limited and usually do not extend to loss of income. The cover is further restricted to the length of time to repair or replace as well as any extended period of indemnity.

Casualty By definition, the Commercial General Liability Policy (CGL) “provides coverage to a business for bodily injury, personal injury, and property damage caused by the business’ operations, products, or injury that occurs on the business’ premises” for which the insured is legally liable. Liability for COVID-19 or any similar outbreak could arise out of an insured’s failure to protect individuals and or their property against infection of such viruses. For example, if a hospitality venue such as a concert hall, restaurant or hotel had knowledge of contamination and did not take adequate precautions to stop the spread at their location. In general, the standard CGL form does not exclude coverage for such diseases, but be careful as the exclusion for cover could be added on by endorsement in the form of a communicable disease or within the Pollution Liability exclusion of the CGL, depending on the policies definition of “pollutant.”.

Workers Compensation

At this time, Workers Compensation carriers are handling coronavirus claims in the same manner as the standard flu. Under most states’ Workers’ Compensation statutes, employees are entitled to benefits for “occupational diseases,” while “ordinary diseases of life” that the general public is equally exposed to are typically excluded. This means that COVID-19 claims are non-compensable unless the claimant works in a vulnerable field such as healthcare and can prove the illness was contracted at work or while traveling for work. As COVID-19 becomes more widespread, this burden of proof will become increasingly difficult.

Professional Lines

Businesses could see COVID-19 losses in many professional areas. Medical professionals in both hospitals and senior care facilities are on the front lines of handling patients infected with COVID-19, making them vulnerable to failure to protect patients, misdiagnosis, health practice quarantines, ceasing operations due to an outbreak on-premises, etc. Hackers are taking advantage of public fear by using emails to trick people into clicking news links that lead to malware downloads as well as attempting to breach the networks and databases of health care agencies. Additionally, how companies respond during this crisis could lead to Employment Practice Liability (EPL), Directors and Officers (D&O) and Errors & Omissions (E&O) claims.

We have begun to see a few carriers adding exclusions for COVID-19 in their terms and endorsements and we anticipate a great deal of change in the coming weeks.

Sela Group actions in this time:

Our agency also provides the full range of services online, all of course in accordance with the various health regulations and the CDC and WHO guidelines.

We will remain vigilant in the face of this adversity and hope that you, your family and friends are safe and healthy.

Originally posted on March 19th, By AmWins, see a link to the original article (HERE).

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