Does Property & Casualty Insurance Provide Coverage for Coronavirus-Related Exposures?

Do I have Business Interruption coverage for this?

In order for the Business Interruption (Business Income) policy to trigger coverage, there has to be a “covered cause of loss.” The form of your policy provides the answer, which has, up to this point, been a resounding no. All of the commercial property company’s forms we have read have a Virus or Bacteria Exclusion, which excludes loss or damage caused by, or resulting from, any virus, bacterium, or other micro-organism that induces, or is capable of inducing, physical distress, illness, or disease. 

ISO (Insurance Services Office) recently released two optional endorsements to address limited BI coverage related to the Coronavirus. In our discussions with companies, they have to file these endorsements and also be willing to utilize them. As of now, we have not seen any companies who are interested in providing these endorsements going forward. 

If my employee(s) contract the Coronavirus, is it covered by Workers’ Compensation?
 
When pressed with the question, the carriers we spoke to stated they do not believe there would be coverage provided. While this statement is not surprising to us, it is important to understand why. The reasoning the carriers are saying no is that they feel Coronavirus is not a “Peculiar Occupational Illness.”
 
So what makes an illness a “Peculiar Occupational Illness,” and therefore compensable under Workers’ Compensation? Two things must be concurrent before any illness or disease, including the Coronavirus, qualifies as occupational and thus compensable under Work Comp:

1. The illness or disease must be “occupational,” meaning that it arose out of and was in the course and scope of the employment; and
2. The illness or disease must arise out of or be caused by conditions “peculiar” to the work.

 
Whether an illness arises out of and in the course and scope of employment is a function of the employee’s activities. The simplest test toward determining whether an injury “arises out of and in the course and scope of employment” is to ask: Was the employee benefiting the employer when exposed to the illness or disease? Be warned; this “test” is subject to the interpretations and intricacies of various state laws.
 
For example, black lung disease in the coal mining industry is a disease that is peculiar to the work of a miner. Coal miners are subject to prolonged exposure to higher-than-normal concentrations of coal dust, leading to black lung disease. This makes the disease peculiar to the coal mining industry and, therefore, compensable. If the disease were pneumonia of a coal miner, there is nothing particular regarding the conditions and, therefore pneumonia would not be compensable.
 
Qualifying an illness or disease as occupational and, more importantly, peculiar to the work (and thus compensable), may ultimately require industrial commission or court intervention to sort medical opinion from legal facts. No one “test” is available to declare an illness or disease compensable or non-compensable; each case is judged on its own merits and surrounding circumstances.
 
 If I don’t have coverage, what should I do?
 
Develop a plan of action.  Discuss with key decision-makers now as to what the biggest concerns would be and what possible remedies for these issues are. Some of these could be:

• cross-training of employees to understand different roles
• plans to monitor and respond to absenteeism
• assessment of what are critical functions would need to be maintained
• who could be alternative suppliers
• who are priority customers that need to be taken care of first if you are short-staffed

 
Develop a communication strategy. Consider developing a plan for how you want to communicate with your employees, customers, suppliers, and other portions of your business. Human Resources officers or those in that role should pull together information about the Coronavirus to create a guide for employees that not only educates them about the viral infection but also enlists ways to avoid it. Employers need to know how to best decrease the spread of Coronavirus in their workplace in the event an outbreak happens and be able to communicate.
 
Discuss your sick leave policies.  Would you want an employee who is sick to test the waters at work because they are worried about running out of “sick days?” The last thing a company would want is for an infected employee to turn up to work because they didn’t have enough paid time, nor an understanding that they could have gone to the doctor. Allow for parameters for sick employees to go to the doctor with proper symptoms to get checked, without feeling the pressure of being reprimanded.
 
Consider providing free preventive devices and items. Stocking up on sanitizers, masks, and other items now rather than later could be extremely helpful as demand increases. Providing these items for employee use both at work and home could be useful. Ask yourself, “Does the cost of supplies and planning benefit you now, or is it better to wait?”
 
Contemplate residual effects. Do you have employees who are at higher risk because of preexisting conditions?  Should these employees be allowed to stay at home if there is an outbreak?  What will policies be for parents who have to take absences for their children or family members? If schools were to close, what are the effects of our employees who are parents?
 
Misinformation can be common, so do your best to educate yourself and your employees with facts. Look for resources from reputable sources and sites. For example, the CDC website, where some of this information was compiled, has prepared some good information on the subject: (https://www.cdc.gov/coronavirus/2019-ncov/specific-groups/guidance-business-response.html).
 
We will continue to provide more information as we obtain it. Please know we aren’t just wishing you “good luck” if this happens, we are willing to meet with you one-on-one to discuss your disaster recovery plan for this and other future issues. 

​This is general information.  Please contact us to discuss your particular circumstances and policy coverage terms.  Insurance carriers conduct a review of each claim filed to determine whether coverage is provided.