As concerns about the COVID–19 continue to rise in the headlines, so has apprehension over the pandemic’s potential threats towards the welfare of our clients’ workforce and the disruption of their businesses.
Simpson|McCrady is here to assist you in reviewing your key insurance coverages and business continuity so that your organization can appropriately develop and implement a plan of action through effective risk management policies, added measures and procedures during a potential pandemic.
KNOWING YOUR COVERAGES AND HOW THEY MAY RESPOND
It is unusual to have a specified policy in place for business loss due to a pandemic. Therefore, it is imperative that you review your policies with Simpson|McCrady to reaffirm any key coverages that may be provided. Below are general policy interpretations and initial coverage analysis – again, specific policy terms and conditions would need to be reviewed in order to confirm the general observations below.
Workers’ Compensation Insurance
Compensability for Worker’s Compensation will be based on whether or not the disease/illness is considered occupational. In order for it to be compensable, the disease would have to be contracted during the course of employment and due to conditions specific to the employees work. For example, if an employee is deemed to have contracted COVID-19 while traveling for work, workers compensation compensability could apply. Likewise, healthcare workers exposed to COVID–19 during their course of employment may merit compensability via Worker’s Compensation.
General liability policies typically provide coverage for bodily injury and property damage. Liability policies often have exclusions for communicable disease or viruses, which means bodily injury and property damage caused by diseases like COVID-19 may not be covered. Claims will likely require specific documentation about the exposure of the disease and potentially its origin and diagnosis, so keep clear records if someone at your organization becomes ill.
Property/Business Interruption Insurance
Business Interruption/Loss of Income policies are almost always embedded in property policies and require that physical loss or damage to covered property, by an insured peril, to trigger coverage. Further, in order for business interruption coverage to trigger, the loss or damage must generally occur on the insured’s premise or dependent premise. Extensions for business interruption for dependent businesses (e.g. suppliers) are also available. In the case of COVID-19, however, communicable disease is not a covered peril – so triggering coverage would be difficult to argue.
TAKING A PROACTIVE APPROACH
Simpson|McCrady and our team of experts recommend several ways in which your business can take a proactive approach to preparing for a negative impact as COVID-19 spreads.
1: Review your business continuity plan and determine appropriate alternatives in light of COVID-19
Examine your business continuity and pandemic policies and procedures to ensure your organization is prepared if your employees become ill. Your continuity plan should include the course of action you will take if an employee is impacted, how to respond and accommodate employees who don’t feel safe working in a communal space or whose home life may be impacted if schools or childcare centers are closed. It should also include a plan to address any employee who is at risk of infection while traveling in quarantined areas.
Identify essential people, processes, technologies and other critical inputs where their absence would have the biggest negative impact on your business and create recovery strategies to minimize any disruption. This could include outsourcing, allowing more flexible teleworking options or developing commuting alternatives for your employees if public transportation is not available. Work with your supply chain partners and other service suppliers to ensure you have a back-up plan should there be a breakdown along the line. This may involve increasing inventory levels of high volume products/services.
2: Communicate with your employees, vendors, partners and customers
Distribute information and official updates from organizations like the WHO or the CDC with your employees so they understand the potential threats from COVID-19. Share information on your organization’s emergency preparedness and response plan and develop a platform that will encourage individuals to speak up if they start to develop symptoms and reassure them that self-reporting is safe. Ask them to quarantine themselves if they have been to areas where a virus has been reported.
3: Communicating with and educating your workforce
Employee health and safety is a key factor to mitigating the risks involved in the evolving outbreak. Be transparent with internal and external stakeholders about how you’re handling the outbreak with your workplace. Develop and distribute programs and materials covering the basic virus fundamentals. Educate your employees on your continuity plans and procedures so that your employees know what to expect if your company is impacted. Issue travel advisories and make sure your employees understand the resources available to protect them. Identify community sources for timely and accurate information. Ongoing communication about the virus will help your employees feel informed and safe.
4: Document Losses
We recommend that you document and quantify lost income, extra expense and employee injury/sickness due to infection in as much detail as possible. Historically speaking, larger uninsured economic events have sometimes experienced governmental intervention in the private insurance marketplace. COVID-19 could possibly be another example of an event that leads to governmental intervention. Those affected companies who can clearly quantify their loss would likely receive quicker and more equitable relief.
Simpson|McCrady appreciates the opportunity to service your commercial risk management and insurance needs. If you have any questions or concerns, please do not hesitate to contact our office.
Yours in health,
The Simpson|McCrady Commercial Lines Team
Last update: March 11, 2020