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COVID-19-Related Business Losses

Are COVID-19-related business losses covered by commercial insurance coverage?

Across the North Shore and Greater Boston region, businesses of all sizes and industries are experiencing considerable operational issues due to the coronavirus, or COVID-19, pandemic. At Gilbert Insurance, we are trying our best to help relieve some of the stress and uncertainty business owners like you are feeling as a result of this strange situation.

This includes providing you with as much information as we can about the most common commercial insurance policies and whether they might provide any coverage for COVID-19-related business losses. Below, we share an initial, general understanding of three types of insurance coverage that most business carry, and how/if they would respond to a coronavirus claim:

1. Property Insurance

Commercial property insurance includes two very important areas of coverage – Business Income and Extra Expense – that are designed to help reimburse you for loss of income and additional expenditures due to a halt in your operations as a result of a covered peril. Both of these coverage areas are triggered when there is a direct physical loss or damage to property at your business premises, caused by a covered peril.

Civil Authority, a coverage area found in some commercial property policies, is designed to provide protection against a loss of income as well as additional business expenses that result from a government shutdown of your company. These types of closures are typically implemented in response to a natural disaster, like a hurricane, tornado, or other severe storm system, that may affect an entire neighborhood, or an even larger area, depending on the breadth of the risk. However, civil authority coverage is activated if your losses are the result of direct physical loss or damage to covered property, caused by a covered peril.

2. General Liability

Commercial general liability coverage is triggered by a third-party claim of bodily injury, sickness, disease, property damage, or negligence that is made against you or an employee of your company. Typically, in these types of claims situations, your general liability insurance pays for costs related to your legal defense, including attorneys’ and court and expert witness fees.

In this COVID-19 era, the most likely scenario is that a claim would arise from a customer, or other visitor to your business, who believes that you or an employee have been negligent in failing to protect them from being exposed to the coronavirus.

As is the case with many other types of uncertain situations in business, the best avenue for safeguarding your company against a potential COVID-19 general liability claim may be to prepare yourself for one by taking the proper preventative measures. The World Health Organization (WHO) recently published,“Getting Your Workplace Ready for COVID-19”, that lays out some simple and low-cost ways to prevent the spread of COVID-19, as well as other contagious illnesses, in the workplace.

Here are just a few of the preventative steps the WHO recommends:

  • All surfaces (e.g., desks and tables) and objects (e.g., phones, keyboards) should be wiped down with disinfectant regularly
  • Put sanitizing hand rub dispensers in prominent places around the workplace and refill them regularly
  • Make sure that staff, contractors, and customers have access to places where they can wash their hands with soap and water
  • Ensure that face masks and/or tissues are easily accessible at your workplace for people with a runny nose or cough, along with closed bins for hygienically disposing of them
  • Brief your employees, contractors, and customers that if COVID-19 starts spreading in your community, anyone with even a mild cough or low-grade fever (99 degrees Fahrenheit or more) needs to stay at home

3. Workers’ Compensation

Workers’ compensation insurance is designed to help employers cover the costs related to employees who are injured or get sick as a result of their employment. These costs may include an employee’s medical expenses, a portion of their lost wages, permanent disability, and, in the worst cases, a death benefit to an employee’s beneficiary.

To qualify for workers’ compensation, the employee’s disease or injury must be caused by the conditions of employment; e.g., a waiter hurts his back lifting restaurant trays or an office manager gets carpal tunnel from typing on a keyboard all day.

Workers’ compensation may be available to an employee if they contract the coronavirus due to any work-related reason. Those who are deemed eligible could receive payments that partially replace their paycheck and cover some or all of their related medical care costs.

Again, implementing the preventative measures outlined above and recommended by the World Health Organization (WHO) should help prevent the spread of not only the coronavirus in your workplace, but other infections as well, including colds, flu, and stomach bugs. Taking these and other critical steps should help business owners create an exceptionally clean and hygienic workplace and help them protect their customers, contractors, and employees today and in the future.

This is certainly not an all-inclusive list of business insurance coverages. Nor should it be considered the insurance industry’s final decision on how these coverage areas may respond to a COVID-19 claim.

According to Agency Checklists, a Massachusetts online publication featuring insurance industry news items, some plaintiff law firms have already hypothesized that COVID-19 coverage might exist for a business that has to cease operations because its premises had become contaminated with the virus. In fact, on March 16th, a New Orleans restaurant filed a lawsuit against Lloyds of London, claiming it had suffered property damage because the coronavirus contaminated surfaces in their establishment.

Gilbert Insurance will continue to monitor this extremely fluid situation and work with our insurance partners to understand these and other policy types that may relate in some way to a COVID-19 claim, as well as how each provider is likely to treat such a claim. In the meantime, if you would like to file a business interruption claim with your carrier, please let us know and we can help you do that.

How Gilbert Insurance is providing additional support

In the coming weeks and months, we understand that you may have many questions about your insurance coverage as related to COVID-19. We encourage you to take some time to revisit the language in your specific commercial policies, paying particular attention to the details in your coverage that refer to limitations and exclusions.

If this review only brings up more questions for you, or you believe you have a justifiable claim to report, feel free to contact the Gilbert team for assistance. While each claim will be decided by your specific provider, our team can help you report your claim and make sure that you receive a written decision from your company.

We also wanted you to know that many of the top providers we work with are implementing one or more of the following new guidelines to ease the financial challenges you may be having during this pandemic:

  • A 30-day grace period on payments that are due
  • Waiving late fees for all policies
  • Not charging a fee for payments made over the phone with a customer service representative

Please check with your specific carrier for more information on what assistance they are offering customers during this difficult time. Also, remember that most of our carriers allow you to sign up for electronic billing, which enables you to access your account 24/7 and quickly pay your bills from wherever you are as long as you have online access.

At Gilbert, we will continue to monitor the COVID-19 pandemic and its implications for local businesses like yours. In the weeks to come, we will be sharing additional information from your insurance providers as well as details about other potentially helpful resources, like the new Small Business Administration Injury Disaster Loan (EIDL) program for COVID-19.

Most importantly, Gilbert Insurance will continue to be available to you via phone and email during regular business hours. If you have any questions, concerns, insurance transaction needs, or simply want to update us on the status of your business, our staff welcomes the opportunity to hear from you.