Gilda Radner’s character Rosanne Rosannadanna always ended her routines on Saturday Night live by saying, “It’s always something.” She might well have been talking about COVID-19, the effects of which are just beginning to be felt throughout the world. Schools are closed, supply chains may be cracked, travel is slowing and events are being postponed or canceled outright, with more impacts probably to come.
Many are asking if there is insurance coverage for the problems caused by COVID-19. The answer is that there may be, but, as always, it depends on the language of the policy and on how the problems arose. As always, the starting point is the policy itself. Its language will be the determining factor in whether coverage exists. With that in mind, the next step is to look at the kinds of coverages that may be affected by COVID-19. You may be surprised at the kinds of coverage that may be affected.
PROPERTY INSURANCE. As the name implies, property insurance covers damage to tangible property from “covered causes of loss;” the classical property insurance loss is damage from a fire or tornado. But properly policies may also provide coverage when tangible property is rendered unusable. Whether coverage exists will depend on a number of factors: the causes of loss covered by the policy, whether there is an exclusion for viral contamination and whether the building was really unusable or shut down voluntarily.
BUSINESS INTERRUPTION COVERAGE. Most commercial property policies also include business interruption coverage, which can provide protection against lost income when a business must suspend operations. There are two subsets of this coverage: business interruption coverage, which applies when the insured’s business is interrupted, and contingent business interruption coverage, which can be purchased as an “add-on” to business interruption coverage. It applies if a supplier or customer has to suspend operations. All business interruption coverage requires that the suspension of operations be due to a covered cause of loss (think fire or tornado again.) Some business interruption overages make action by governmental officials or law enforcement a covered cause of loss (think about the closing of access to areas after Hurricanes Katrina or Harvey.) Business interruption claims are complex. The same coverage issues found in property claims (Is it a “covered cause of loss?” Is viral contamination excluded?) apply here.
WORKERS COMPENSATION COVERAGE. Press coverage of COVID-19 has not highlighted this problem, but it is certain to arise: what if an employee claims to have contracted COVID-19 in a workplace or during the course and scope of employment? In many states, if there is a sufficient nexus between job duties and contracting COVID-19, there may be coverage.
LIABILITY COVERAGE. Important for owners and operators of public facilities such as restaurants, malls, hotels and motels and any other places where crowds can gather. There is a significant history of suits for exposure to diseases such as legionnaire’s disease (hotels and senior centers) and non-tubercular mycobacteria (hospitals) and some liability policies exclude coverage for communicable disease. Again the policy language will be determinative.
SPECIALIZED COVERAGES. This includes event cancellation coverage, travel insurance for individuals and other similar policies. Individual policy terms will apply here.
WHAT SHOULD I DO?
Unforeseen risks like COVID-19 that appear seemingly out of nowhere are real-world “stress tests” for insurance programs.
First, obtain full copies of all insurance policies and review them together with a professional to determine what coverage is (or is not) available for COVID-19… and for other risks that may not be adequately insured. The Dykema Insurance Industry Group regularly undertakes such reviews.
Second, do you know how to make a claim on your policy? Are you prepared to support your claim with evidence? The claim process can be time-sensitive and tricky. Do you understand your obligations?
Third, can you get access to important records if your offices are physically closed or quarantined? Financial and other business records are essential to making business interruption claims and to continuing operations. Can you get to your data if you are kept away from your offices because of a quarantine? Ensure that you can have access to all records at all times (this isn’t just your records; it’s your cloud storage, customer links and every kind of record you need to operate).
Fourth, what steps are you taking with respect to your public spaces? Your employee lunchrooms? Bathrooms? Lobbies? What are your procedures for monitoring sick employees? Travel? Put procedures in place immediately. This is another area where Dykema can provide resources.
Fifth, what about your supply chain? Your customers? Sheryl Tobey of Dykema, who has extensive experience with these issues wrote on this yesterday.
Finally: it’s always something. Ask yourself what you have missed. It’s always something.