Potential Insurance Coverage For COVID-19 Losses

Brooks Pierce
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Brooks Pierce

As companies navigate the COVID-19 pandemic, they should take stock of existing insurance policies that may provide coverage for:

  • damages and losses suffered by the company, or
  • potential liability of the company.

What Type of Claims Could Arise?

While this pandemic and the government response is unprecedented, your business may encounter several issues giving rise to a claim under one or more types of insurance policies. Examples of these issues and the types of insurance that may provide coverage are:

  • Slowdown or stoppage of business
    • Property insurance with business interruption (BI) or “civil authority” coverage (review carefully, many policies will require actual physical damage to property before BI coverage is available)
    • ​​Supply chain risk or trade disruption insurance
  • Contamination to business property
    • Pollution or environmental insurance
    • Commercial general liability insurance with pollution/environmental coverage
  • Personal injury, and third party property damage, claims against the business (e.g., alleged negligence leading to virus exposure)
    • Commercial general liability insurance
    • Errors & Omissions liability insurance
    • Pollution or environmental insurance
  • Employee claims against the business
    • Workers’ compensation insurance
    • Employment practices liability insurance
  • Losses or expenses caused by cybersecurity breaches during work-from-home operations
    • Property insurance
    • Cyber insurance

Policy language varies widely, so there are no universal answers about whether a COVID-19 related issue will be covered. Some policies will have exclusions for contamination, pandemics, bacteria or viruses, or the exercise of “civil authority.” Policies must be read as a whole. It can be difficult to decipher when a coverage or exclusion applies. A good place to start is your insurance broker (who can help you obtain a copy of the complete policy) or an attorney.

What Can I Do Now to Prepare for Potential Claims?

Keep detailed records of everything that affects your business and steps that it takes. Keeping a timeline of events will be very helpful. For example:

  • Document when employees or customers report symptoms or a positive coronavirus test;
    • Note especially the extent to which employees or customers were located on the premises while potentially contagious;
  • Document any additional cleaning or preventative measures;
  • Track payroll and all other expenses related to COVID-19;
  • Document the dates and reasons for any changes to your operations, i.e., policy changes, hours of operation changes or closures (whether voluntary or government-mandated):
    • Make copies of any government orders mandating your closure, etc.;
  • Keep any pre-outbreak business plans or forecasts and carefully track actual performance.

What Should I Do If I Believe I Have a Claim?

  • Do not delay. Notify your insurer and broker as soon as possible of a claim or potential claim.
  • Cooperate with the insurer’s reasonable requests for documentation and information about the claim.
  • Make the insurer take a position to either accept coverage or deny the claim.
  • If the insurer denies a claim, consult an attorney about your options.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Brooks Pierce | Attorney Advertising

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