COVID-19 Business Interruption and
Workers Compensation Coverage
The novel coronavirus has taken the globe by storm and has forced businesses nationwide to close. For many business owners, this might seem like an ideal time to file a business interruption insurance claim. However, they might find it more challenging to get a payment from their insurance company due to the changes made after the 2002-2003 SARS outbreak, which led to millions of dollars of business-interruption insurance claims. As a result, many insurers added exclusions to standard commercial policies for losses caused by virus or bacteria. The insurance industry states that its policies are strictly regulated by state authorities and that these exclusions are necessary given the staggering number of claims that can arise from a single disease outbreak.
About one-third of U.S. businesses have business interruption insurance, which is designed to cover losses when an event causes a company to suspend or halt operations. Many policies also have civil authority clauses that cover losses when a governmental agency forces the business to stop operating – a common example would be a fire that damages a restaurant and leads the fire marshal to close it down. However, almost all insurance policies require a physical loss to trigger either of these coverages, so this coverage would not respond to lost income as a result of COVID-19.
Now you might be wondering, is COVID-19 covered by workers’ compensation? Workers’ Compensation Insurance is meant to cover illness or injury arising out of or during employment. So, the answer on whether coverage would apply depends on
how the employee contracted the disease. In most cases, exposure or contraction of the virus is not considered to be a work-related injury or condition. For instance, if there was only a chance an employee was exposed to the coronavirus on the job, the claim would likely be denied. However, if exposure was a direct result of work, the claim has a much higher chance of being approved. This would be most plausible for employees whose work is directly related to coronavirus, such as testing labs, first responders, medical offices and clinics, etc.
As COVID-19 continues to spread, individuals, businesses, governments and healthcare providers will see its impact and fallout. If your business is impacted by coronavirus, review your insurance policies now and be sure to document coronavirus-related business impacts. Planning for the next problem will be key. Contact your account manager and carefully look through your existing policies to see what coverage, if any, you have today, and what coverage you may want to purchase for the future.
Our thoughts and prayers go out to everyone affected by this. Hawley and Associates continues to be fully functioning and ready to serve you during this unprecedented time. Stay safe and healthy!