The coronavirus pandemic is ravaging the global economy. Recent news reports have indicated that the impact is being felt in almost every industry around the globe. Here in the United States, we have seen travel, entertainment, event planning, hospitality, and other industries such as manufacturing and service activities taking a hard hit.
Recently the insurance industry has cut back on the types of coverages for pandemic diseases and have put in new or broadened exclusions. Additionally, they have applied strict sub-limits in order to contain insurer exposure.
However, there are still pockets of coverage that exist and during this crisis it’s important that you assess your business’s vulnerability and the insurance you may have in place that addresses future losses.
What About My Business Interruption Insurance?
Many companies have Business Interruption Insurance in place as a part of their first-party property insurance or as an independent policy.
In general, business interruption insurance in Louisiana protects you against losses due to periods when your business operations may be suspended due to property damage.
Most of the time contagious diseases are not considered property damage. However, actual contamination of tangible property such as a fear of contamination may constitute property damage for insurance purposes.
For example, if your HVAC system becomes contaminated it could constitute property damage. If your business property was actually contaminated and it forces you to shut down your business your business interruption insurance may come into play but there are limitations such as:
- Many insurers have added specific exclusions for bacterial or viral infections to their coverage. Galen Hair at the New Orleans law firm of Insurance Claim HQ have seen both stand-alone bacterial exclusions and combined bacterial/virus exclusions. It’s important to note that viruses are not bacteria. If you have an exclusion for bacteria, you may still have coverage available for the coronavirus.
- The insurance companies may argue that their standard pollution exclusions bar you from recovery. However, whether viruses or bacteria are pollutants is up for debate and there isn’t any hard and fast rule.
What About My Supply Chain Insurance?
In some instances, your business may have purchase supply chain insurance or Contingent Business Interruption Insurance to protect you against any losses stemming from your supply chain being disrupted.
These polices are in existence to cover your business in the event that you have an interruption in deliveries of parts, supplies, and/or raw materials.
Contingent Business Interruption insurance normally covers your economic losses including increased costs, local and/or reduced operations resulting from physical damage to the premises of your supplier.
Additionally, some supply chain and Contingent Business Interruption Insurance policies many cover any losses of services to your business such as loss of utility services.
To be clear, supply chain insurance covers:
- Losses stemming from disruptions from specific suppliers scheduled in your policy
- Requires that the supplier suffer the type of property damage that would be covered in your first-party insurance policy. This would require an actual contamination.
What About Event Cancellation Insurance?
Some Louisiana companies carry specialized event cancellation insurance coverage. This type of insurance normally exists in such industries as sports, entertainment, and event planning.
Additionally, your policy may be written to include specific insurance against cancellation because of infectious diseases such as Covid-19.
Galen Hair, one of the Policyholder Counseling and Recovery attorneys at Scott, Vicnair, Hair & , LLC in Louisiana have learned that some insurance companies have already started inserting endorsements to exclude coronavirus into this type of coverage. If your policy was written before 2019, it is unlikely to carry such an exclusion.
However, if you purchased express coverage for infectious disease cancellations, you should check your policy to make sure a coronavirus exclusion hasn’t been added without your permission and/or agreement.
What About My Liability Insurance?
You may face a risk of liability for failing to protect others from exposure to infection while on your premises. Health care providers, transportation, hospitality services and retail businesses are the most vulnerable.
Your general liability insurance covers liability for bodily injury and property damage and normally your primary Commercial General Liability policy will provide a legal defense to these types of claims.
You may also face a claim for losses that doesn’t involve a bodily injury or property damage. You may face claims based on a failure to meet a duty of care that could be covered under your Errors and Omissions insurance, and your business may face a claim for financial losses that resulted from mismanagement of your response to the coronavirus pandemic.
What About My Worker’s Compensation Insurance?
In Louisiana, workers compensation insurance covers your employees who may suffer an injury or illness contracted in your workplace. Coverage is based on “work-relatedness” and is analyzed based on the time the loss took place, the place the loss occurred, and the specific activity the worker was doing at the time of the loss.
For example, a health care worker who becomes infected with the coronavirus may have a valid argument for coverage because they were exposed to a patient while on the job.
The best time to prepare for an infectious disease exposure is before they actually happen. This includes assessing your risk and assessing all of your insurance before it becomes relevant. Galen Hair at the New Orleans law firm of Scott, Vicnair, Hair & , LLC is poised to assist you in any way possible.