As the volume of confirmed COVID-19 cases continues to escalate across the United States, business owners from coast-to-coast are feeling the impact with significant loss of business.
In many cases, state and local governments are mandating that certain types of businesses, such as restaurants and bars, shut down for extended periods or restrict their patronage to carry-out-only orders to prevent the further spread of coronavirus in their communities.
According to the Insurance Information Institute, there are several types of commercial insurance coverages that may help businesses cope with the significant losses they will incur as the pandemic spreads.
Business Interruption Insurance
Mark Friedlander, director of corporate communications at the Insurance Information Institute, told Business Class News that a business interruption policy typically covers a business owner for lost profits and continued fixed expenses during the time a business must stay closed.
“Business interruption policies may cover financial losses occurring after civil authorities limit access to an area, preventing customers and suppliers from reaching the premises of the business,” Friedlander said. “Depending upon the specific policy, its civil authority coverage component may or may not require that the access restriction result from physical loss by a covered cause of loss and, if so, often does not require that physical loss to occur to the policyholder’s own property.” He added, “In the event that a federal, state or local governmental authority limits access to or from areas where the virus has been identified, civil authority coverage may be applicable.”
Friedlander said business interruption insurance can also include coverage for communicable or infectious diseases, depending upon the policy. However, some policies exclude virus-related losses.
He added, “Contamination is considered damage in the case of a pandemic. Business interruption insurance would cover the costs of decontaminating and sanitizing the premises of the impacted business.”
Commercial General Liability Coverage
Commercial general liability (CGL) coverage is intended to protect businesses against third-party claims for bodily injury resulting from exposure to harmful conditions.
“We could see hospitality industry CGL claims from infected guests who they allegedly failed to exercise reasonable care in guarding against, or warning of, the risk of exposure to COVID-19 while staying at the lodging property,” Friedlander said.
Workers’ Compensation Coverage
Workers’ compensation insurance pays for the medical care and physical rehabilitation of an injured worker and helps to replace lost wages while the worker is unable to work. Friedlander said these policies are generally purchased by employers for their employees.
“Washington State recently ruled that its workers’ comp program would accept claims from health care workers and first responders who have been quarantined after being exposed to coronavirus on the job treating COVID-19 patients,” he said “Coverage would include medical testing, treatment expenses and lost wages.” Kentucky has issued a similar ruling.
“Disability insurance covers the insured person in the event they are unable to work due to an injury or illness,” Friedlander said. “Each individual disability policy includes a definition of disability that must be satisfied in order for the insured to receive the policy’s benefits.”
Friedlander recommended business owners should contact their insurance professional to review their current commercial coverage and focus on any gaps that should be addressed. More information about commercial insurance is available from the Insurance Information Institute at www.iii.org.