The outbreak of COVID-19 (new coronavirus) is a fast-moving situation, and many of our clients have contacted us in the past week with questions about their coverages.
We wanted to provide more information to all our commercial insurance clients relating to their insurance coverage.
Q: We’re a small business and sales have slowed due to COVID-19. Is there coverage for lost or lowered income?
A: Unfortunately, Business income is not recoverable under the property policy coverage for COVID-19. The parameters on most coverage forms state “direct physical loss” must be the cause of the claim. Direct physical loss perils are fire, lightning, explosion, smoke, hail, windstorm, theft, vandalism, malicious mischief, riot, civil commotion, sinkhole collapse and a few other random items. There are also specific exclusions relating to Communicable Disease; Virus or Bacteria and other contagions on most Property policy forms.
Q: Is our business covered if a customer contracts the virus at our location?
A: General Liability coverage requires the business to be negligent to cover losses.
Q: I’m a Board Member for a privately held company. If there was a claim with the business relating to COVID-19 how would the Directors & Officer Liability policy respond?
A. Unfortunately, Bodily injury, sickness, and disease are all excluded under most coverage forms for Directors & Officers Liability policies.
Q. Our business is restaurant. If one of our employees contracts COVID-19 would coverage from our Workers’ Compensation policy be triggered?
A. Bodily Injury by disease must be caused by “conditions of employment”. Again, this stands to prove negligence of the business owner so coverage most likely would not be provided to employees or covered Officers affected by COVID-19.
These statements are based on standard insurance policy forms. We welcome our clients to contact our agency if there are further coverage questions. We are happy to review your policy forms to consult on this matter further during this time of uncertainty.