The COVID-19 crisis and its economic fallout have many organizations hunting desperately for financial relief. While much has been made of the various governmental support programs, it’s also worth reviewing your insurance policy portfolio to determine if you qualify for coverage for some of your COVID-19-related losses and exposures.
Below are some of the insurance policies and provisions that might help your organization — and some of the challenges you may face trying to get reimbursed for losses.
Many property insurance policies include coverage for business interruption losses. They typically reimburse the lost income and extra expenses incurred when your operations are disrupted due to property damage.
Those policies, however, generally require physical loss of, or damage to, the insured property for the coverage to apply — and insurers are likely to argue that COVID-19 closures don’t satisfy this requirement. But courts haven’t settled on a universal definition of physical loss or damage, and some previously have ruled that contamination or other occurrences that make property unusable qualify.
In addition, property insurance policies might provide coverage for losses incurred when a “civil authority” blocks access to the property (through, for example, stay-at-home orders), regardless of physical loss or damage. And some policies cover communicable disease without requiring physical loss or damage. On the other hand, policies might exclude losses caused by pathogenic organisms, viruses and disease, bacteria or illness-causing agents.
In other words, the policy’s exact language ultimately will determine whether coverage is available. Not surprisingly, litigation over business interruption coverage for COVID-19 losses already has begun.
State legislative action also could determine the scope of coverage. For example, several states have introduced or considered bills that would prohibit insurers from denying business interruption claims based on a lack of physical damage or because COVID-19 is a virus. The insurance industry, of course, is bound to put up a fight.
Comprehensive general liability (CGL)
Nonprofits could face claims from clients, guests and others alleging they’d failed to exercise reasonable care in protecting against or warning of the risk of exposure to COVID-19. CGL policies, which cover third-party claims for bodily injury, might apply. Again, though, the policy language plays a critical role; it could include applicable exclusions.
You also could run into similar claims from employees. Those claims may fall within CGL coverage if they don’t qualify for workers’ compensation coverage.
Workers’ comp applies to injuries “arising out of or in the course of employment.” Although “ordinary diseases of life” (meaning those the general public is equally exposed to) generally aren’t covered, workers’ compensation coverage would be triggered if the illness was directly caused by an employee’s work — for example, when a social worker is exposed while helping sick clients find the resources they need. The nuances of workers’ compensation coverage vary by state, so check with your attorney.
Bear in mind, too, that workers’ comp claims during this time aren’t necessarily limited to those from people who’re diagnosed with COVID-19. If you have employees working from home, they could file a claim after, for example, tripping over a laptop power cord.
Follow the rules
Whether your insurance policy provides coverage will depend on the specific circumstances and policy language. If you believe you’re covered, take care to comply with the policy’s claim requirements, deadlines and other obligations so you don’t inadvertently forfeit the coverage you’ve paid for.