Coronavirus (COVID-19) Insurance Coverage FAQ
While we all are working to deal with the outbreak of the Coronavirus (COVID-19), many of our clients have raised questions regarding their insurance coverage. We pose some questions and answers to the most common concerns that have been recently expressed. Please note that each policy form should be reviewed for answers to the specific coverage questions that need to be answered.
Do I have Business Interruption coverage for my Business during this pandemic outbreak?
Many of our clients have inquired as to whether their Businessowners or Commercial Package insurance policies provide them with Business Interruption coverage during this pandemic outbreak. A significant number of businesses in NJ have been forced to close their doors, or severely limit their normal operations during this time. Other business may remain open, but due to a marked decrease in activity and in many cases their income, they have had to cease certain operations. Some projects may have been delayed, and many businesses have had to reduce the hours for some of their workers, or even make reductions in their workforce. The most common question we have received is will my property insurance cover my loss of income, my expenses, payroll, etc.?
In 2004, following the SARS Epidemic, the Insurance Services Office (ISO), a publisher of industry standard forms, created a standard exclusion for Loss Due to Virus or Bacteria that the vast majority of insurance companies adopted. This form, if attached to a property policy, would most likely eliminate coverage for claims related to shutdown due to Coronavirus. ISO form CP 01 40 07 06 specifically states "We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease." The exclusion also states that it applies to "business income" (i.e., business interruption) including business income caused by the action of civil authorities. Not every insurance company has adopted the “standard” ISO exclusion, and some insurance companies have developed their own specific Virus or Bacteria exclusions. As mentioned previously, each policy must be examined to determine where coverage may or may not be provided.
Ultimately, the determination of whether coverage applies is up to the specific insurance carrier. While we can help provide guidance as to coverage controversies and how we believe a claim will be adjudicated, the decisions are ultimately made by the insurer. If any of our clients wish to pursue a claim and believe they have a reasonable case for direct physical loss or damage, we will do our best to help.
Do I have Liability Coverage for this pandemic?
What happens if someone else alleges that your actions or products gave them the Coronavirus, or at least failed to protect them from the Coronavirus? Does your General Liability coverage apply? ISO once again has specific exclusion endorsements for Communicable Disease (CG 33 76 05 09) that modifies only the product/completed operations liability part of the policy. This endorsement is not commonly attached to business policies, but may be present.
The other more common liability endorsement is the “Fungi or Bacteria Exclusion” (ISO form CG 21 67 12 04). While Fungi is defined in that exclusion endorsement, bacteria is not defined in this form, or in the standard general liability form. Is bacteria the same as a virus? No, it is not, and for this reason defense and indemnity may apply under a general liability policy for litigation involving the Coronavirus. Insurance companies will not provide coverage for intentional acts or willful negligence, so it is important to stay informed and maintain compliance with all local laws and specific guidance as it relates to the Coronavirus response measures. Once again, the specific insurance policy in question should be carefully reviewed to answer coverage questions.
Companies could also encounter other types of claims. Professionals could face situations where they are alleged to have not met a duty of care, or that a company or their managers are alleged to have mismanaged their response to the pandemic, resulting in financial loss. In these cases, it is possible that coverage may be found under Errors and Omissions insurance or under Directors and Officers insurance policies. If any third party has made such a claim against you, please call us as soon as possible.
Would my Workers Compensation policy cover exposure to COVID-19 in the workplace?
Every claim submitted under workers compensation will be evaluated on a case by case basis. Having been involved with the NJ workers compensation system for many years, we expect that coverage will be liberally construed in favor of the employee. The important action here is for the employer to report any suspected claims to their workers compensation insurance company for determination under the Workers Compensation Statute.
I'm struggling to pay my bills, and my insurance is due soon. What can I do?
Many of our insurance companies are easing their rules and penalties for late payments. Some have extended payment due dates or have extended their time frames for issuing notice of cancellation for different types of policies. If you are in this situation, please give us a call and we can help you understand the updated guidance from your insurance company. Please do not allow your policy to cancel without taking action -- let us see if we can help, rather than allowing a policy to cancel and starting all over when things return to normal and we need to get the coverage again.
We know that many businesses are struggling with a loss of income during this pandemic. Unfortunately, the bills remain and need to be paid, including insurance. If you are interested in learning more about the economic assistance that is being made available to local businesses, the New Jersey state department of labor has issues guidance for employers and has made economic assistance available. Additionally, the U.S. Small Business Administration is also making New Jersey business eligible for Economic Injury Disaster Loans (EIDLs).
If you have any insurance or related questions, please call us at (732) 449-3800 or email us at firstname.lastname@example.org anytime and we will do whatever we can to help. While our offices must remain closed to the public, the Danskin Agency remains open and available to you during this time. We wish everyone and their families safety and good health during this difficult time.