Is coronavirus covered by insurance?

Martin Fox-Foster
Martin Fox-Foster
Director of Coverage & Insurance

Our team has been fielding inquiries from clients for the past few weeks related to the novel coronavirus (COVID-19). Below are answers to some frequently asked questions that we hope will assist you in decision making and provide you with insights into your insurance coverage for this unprecedented event.

Every policy and scenario is likely to be different so we encourage you to reach out to your G2 advisor to discuss your specific situation.

Do we have business interruption coverage if we decide to close because of the outbreak?

If you are taking a precaution by closing your organization to visitors or customers then you will likely not have coverage in place. Business interruption coverage typically does not respond where you make the decision to close your own doors without direct physical damage or contamination on-site.

Will we have business interruption coverage if ordered to close by local, state or federal government?

If there is a government closure of your facilities which results in an income loss, coverage will likely only apply if there is actual contamination or physical damage within a given radius of your location. This means that a precautionary shut down by the government of a locale is not likely to trigger coverage. Furthermore, whether the presence of coronavirus at a given location will be considered direct physical damage will depend on the facts, the wording in your policies and the jurisdiction in which the event takes place and your policy is considered under. Recovery for business income losses under these circumstances may not be a straightforward claim, but G2’s Claims team will be here to guide you through the process and advocate on your behalf. There may also be exclusions that apply to your policy for viruses or bacteria that remove coverage completely.

Will our business interruption cover us for the presence of coronavirus at a key supplier or customer’s location?

Many commercial property policies include contingent business income coverage for financial losses resulting from disruptions to an organization’s customers or suppliers, usually requiring that the cause of damage to the customer or supplier be of a type covered with respect to their own property. This means that the same requirement for contamination or physical damage to the supplier or customer’s location will apply to any contingent loss that you suffer.

We have a large event coming up, if we cancel it is there coverage in place for the lost income or extra expense associated with the event?

Unless you have a specific event cancellation policy with communicable disease coverage for this event, you may have limited coverage in place for these losses and expense. Some commercial package policies have a small sub-limit for cancellation of your own events or of third party conferences you are attending but these are typically small limits of $10,000-$25,000 and, again, many require actual damage or a specific government order to apply.

If we continue to operate or hold a large event and people contract COVID-19 at our event or facilities, do we have coverage for such claims?

For a third party who attended your facilities or your event, it would likely be an extremely difficult claim for them to bring to prove that you were responsible for their illness and that you were liable for them contracting a disease that is now spreading throughout communities. However, that may not stop someone from suing you if they so wish. General Liability policies do cover claims from third parties for bodily injury which this disease would be so your General Liability policy may provide some coverage here. Some General Liability policies though do have specific communicable disease exclusions which takes them outside the bounds of coverage.

If our employees get COVID-19 at work, will our Workers Compensation policy provide coverage?

While “ordinary diseases of life” (i.e., those to which the general public is equally exposed) are generally excluded from Workers’ Compensation insurance programs, if an employee can establish a direct causal connection to the workplace, there may be a valid argument for Workers’ Compensation insurance coverage. To the extent that other claims for employee-related coronavirus illness do not qualify for Workers’ Compensation benefits, coverage might still be afforded under certain General Liability insurance policies.

We have employees overseas, do we have coverage for any medical expense or medical evacuation costs?

If your organization has an International Package or Business Travel Accident policy in place you may have coverage for medical costs incurred by employees who contract COVID-19 overseas, although the specifics of your policy will dictate. There is potential coverage for medical evacuation, evacuating where there are travel restrictions in place will likely be challenging.

How might my D&O or EPLI coverages be impacted by COVID-19?

A company’s directors and officers may be subjected to shareholder suits alleging that their actions (or inaction) in response to COVID-19 caused the company to lose value. Shareholder suits could come in many forms but may focus on alleged failure to develop contingency plans, to follow government guidance or failure to disclose the risk that coronavirus or other pandemics could cause to their business. Directors & Officers policies may provide coverage for the costs and liabilities arising from these shareholder lawsuits. Your Employment Practices Liability policy may be impacted in the event of a sustained business income loss that results in a need for layoffs of staff, allegations of discrimination, or a hostile work environment for employees who have or are suspected to have coronavirus.

What should we do if we think we have a covered claim?

If you believe you have sustained a loss as a result of COVID-19 please reach out to your G2 advisor for assistance and guidance.

For more information, please contact your G2 advisor or G2 Insurance Services at 415.426.6600 / connect@G2insurance.com.

Business InterruptionCOVID-19D&OEPLIWorkers Compensation

Claims Management, Commercial Insurance, Medical, Risk Management, Workers Compensation