The overall financial impact of COVID-19 continues to be a significant area of concern and uncertainty for businesses across the globe. While the long-term implications of the coronavirus remain unknown, business leaders are searching not only for ways to protect their employees’ health and safety, but to protect their company and offset financial risks now and in the future. What, if any, protection or recovery is afforded with insurance?

Below is our perspective on how certain insurance coverages could impact your business assets and liabilities.

  • Workers Compensation provides wage replacement and medical benefits for employees’ injuries and illnesses arising out of their work.
  • Coverage may apply IF an employee is exposed to COVID-19 during the course and scope of employment.
  • However, there is no coverage if a business experiences a financial loss from employee absenteeism arising out of COVID-19.
  • At this time, it is difficult to know how a General Liability policy will respond in the event of a bodily injury or property damage loss arising out of third-party claims from COVID-19 exposure.
  • Each policy will be evaluated on its own merits, given the pollution exclusions and policy language, including with regards to defense coverage.
  • A slowdown or cease in operations due to COVID-19 will force most businesses to turn to their Property & Business Interruption insurance carriers for financial recovery.
  • At this time, we expect that most insurers will NOT payout Business Interruption claims arising from the COVID-19.
  • Property Policy forms, including Business Interruption insuring clauses contain verbiage that would likely prevent a business income claim from being covered due to COVID-19.
  • In order for the policy to respond, there must be physical damage (direct physical loss) to the covered property by a covered cause of loss leading to the slowdown or cessation of a business. This requirement applies to business income dependent property losses (supply chain) and civil authority losses covered by Business Interruption insurance.
  • Currently, most financial losses arising from COVID-19 are absent the physical damage trigger.
  • We believe that insurance companies will be tested as this situation evolves and we will most likely see insurers being sued to defend their coverage position(s), but as policies are written today, we do not see there being business income coverage if a government authority (civil authority) require businesses to close, or if a business in order to protect its constituents closes.
BUSINESS TRAVEL ACCIDENT INSURANCE (for companies that purchase coverage)
  • Business Travel Accident Insurance sold to corporations may include Trip Cancellation and Trip Interruption Benefits, providing reimbursement for prepaid, non-refundable trip costs. However, these benefits typically respond only when a qualified medical provider deems the employee or immediate family member to be ill under the terms of the policy.
  • Emergency medical evacuations are coordinated by the Business Travel Accident Insurance policy’s designated travel assistance service provider, but these cannot be performed when an insured is under quarantine or other legal restrictions.
  • Security Evacuation Expense Benefits exclude epidemics.
  • For refunds, check with your airline and hotel to see if they will return your money or offer you credit.
  • Individual trip travel policies can be purchased, including a Cancel for Any Reason Benefit, but these individual policies are very costly.

We have and will continue to monitor and share information to help you navigate the uncertainty of COVID-19 and its associated impact on your organization. Contact your MJ Consultant with any questions and continue to check for updated information and helpful resources.

Additional resources:

Coronavirus and the Workplace

Protecting Workers from Coronavirus

National Law Review – Coronavirus Losses: Will Your Commercial Insurance Policies Respond?

Center for Disease Control and Prevention

World Health Organization