Coronavirus and Your Business Insurance: What You Need to Know.
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- Is Coronavirus covered under workers compensation insurance?
- COVID-19 and Workers Compensation: What You Need to Know.
- Coronavirus and Civil Authority: What You Need to Know.
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- Will my insurance cover my business for Coronavirus losses?
- Does workers' compensation cover Coronavirus?
- Does my General Liability Insurance Cover Coronavirus?
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Many of our clients have been asking how their insurance policies will respond to the Coronavirus. Specifically, we are fielding questions related to workers' compensation and lost business income. We encourage you to call our offices with any questions or concerns you may have. As part of our commitment to supporting your business and employees through the challenges of the Coronavirus, we have prepared this guidance bulletin.
Coronavirus & Workers Compensation Insurance
Two tests must be satisfied before any illness or disease, including the Coronavirus, qualifies as occupational and thus compensable under workers compensation:
1. The illness or disease must be "occupational," meaning that it arose out of and was in the course and scope of the employment, and
2. The illness or disease must arise out of or be caused by conditions "peculiar" to the work.
Whether an illness qualifies as occupational is subject to interpretation. An illness or disease is "peculiar" to the work when the ailment is found almost exclusively in workers of a defined industry, or unique working conditions.
It is our opinion that the Coronavirus does not meet these tests. Claims involving ordinary diseases of life are typically not considered compensable for employees who are at no higher risk than the general public. Still, each case must be decided on its own set of circumstances. If an employee can prove that the disease was caused or aggravated by the conditions of employment, the claim may be deemed compensable. So it is our strong recommendation employers follow the law. Employees have the right to report any work-related injuries to their employer. Employers are responsible for reporting that information to their state's Division of Workers Compensation and Workers Compensation insurance carrier.
Your insurance carrier will determine if a claim is compensable. If an employee disagrees with the insurance company’s decision, they have redress through the Division of Workers Compensation and the courts.
Coronavirus and Business Income Insurance
Business Income insurance traditionally pays lost income claims due to a disruption of business resulting from physical damage to insured property such as buildings, contents, and equipment. Without direct physical damage, business income coverage will not be triggered. While there may be exceptions, most insurance policies exclude business disruption losses due to viruses and bacteria, including Coronavirus.
Coronavirus and Government or Civil Authority Shutdown
If the government or a civil authority shuts down access to the insured’s property, the reason for the shutdown would need to stem from a “covered cause of loss” in order to trigger coverage for the policyholder. "Covered cause of loss" is commonly defined as physical damage to property. The issuing of an order by a civil authority mandating the suspension of business operations not due to a physical loss or damage nor did it prohibit access to the described premises typically will not trigger coverage.
Coronavirus and General Liability Insurance
General liability insurance traditionally pays claims of legal liability for bodily injury and property damage made against the insured by others. In order to trigger coverage, the injury or damage must be caused by an “occurrence” meaning an accident. The answer to this question generally turns on whether the insured foresaw the claimant’s injury. Given the public warnings about the need to prevent Coronavirus exposure, one might question whether the occurrence requirement has been met. Further, most general liability policies contain coverage exclusions related to communicable diseases.
Best Practices
The Coronavirus has quickly impacted our economy. In response, government regulators are issuing extraordinary measures. In the aftermath of Hurricane Katrina, insurance carriers were forced by the courts to pay claims that had previously been denied. On March 5, 2020, Washington state's Department of Labor & Industry announced it would be providing work comp benefits to first responders and healthcare workers quarantined by a public health official or physician. (Washington is a monopolistic workers compensation state.)
With any claim, policy wording and the specific trigger driving losses determine the applicability of coverage. When any insurance claim is filed, it will be adjusted on the applicable policy wording and specific details driving the loss. Each claim is reviewed on its own merits and coverage is applied in accordance with the facts of the claim and the applicable policy language.
At Bukaty Property & Casualty, we strongly encourage our clients to report any circumstance which might give rise to a claim. We will diligently assist our clients in seeking a favorable outcome.
We will continue to monitor this evolving situation, and update this web page as needed.
News & Events
- Litigation Over Business Interruption Insurance Heats Up
- New Orleans Restaurant Files Business Income Lawsuit
Owners of the Oceana Grill, a New Orleans restaurant in the French Quarter, have filed what may be the first lawsuit challenging Coronavirus limitations and exclusions within their "Business Income and Extra Expense" insurance coverage. The suit is in response to the Governor of Louisiana's recent order canceling large social gatherings to slow the spread of the Coronavirus. Oceana Grill's lawsuit asserts that premises contaminated by the virus have suffered "direct physical loss."
- Oklahoma Tribe Files Business Interruption Lawsuit
The Choctaw Nation of Oklahoma has filed a lawsuit against Lexington Insurance Company seeking compensation for lost income due to closure of their casino as a result of the Coronavirus. The tribe asserts that their "all-risk" policy is responsible for providing coverage for said losses.
- Missouri Department of Insurance COVID-19 Policyholder Assistance
On March 21, 2020 the Missouri Department of Commerce and Insurance issued guidance to all insurance carriers serving Missouri residents asking they allow a grace period of at least 60 days for unpaid insurance premiums. See full bulletin here.
- Missouri First Responders with COVID-19 Eligible for Workers Compenastion See full article here.
- House Legislators Begin Pressuring Insurance Carriers to Pay COVID-19 Claims See full article here.
Various members of Congress are beginning to pressure insurance carriers to pay business interruption insurance claims resulting from the COVID-19 pandemic. The insurance industry has been quick to respond that it has never charged premium or reserved claims dollars for a pandemic exposure. Paying these unreserved claims would bankrupt the industry leaving policyholders with no coverage for intended perils. State insurance regulators seem to be siding with the insurance industry. See more details here.
Useful Links for Additional Information on Coronavirus
The counties and cities where we can offer insurance guidance in Kansas & Missouri:
Kansas Counties & Cities
- Douglas County: Baldwin City, Eudora, Lawrence, Lecompton.
- Franklin County: Lane, Ottawa, Pomona, Princeton, Rantoul, Richmond, Wellsville, Williamsburg.
- Jefferson County: McLouth, Meriden, Nortonville, Oskaloosa, Ozawkie, Perry, Valley Falls, Winchester.
- Johnson County: De Soto, Edgerton, Gardner, Leawood, Lenexa, Mission, New Century, Olathe, Overland Park, Prairie Village, Shawnee, Spring Hill, Stilwell.
- Leavenworth County: Basehor, Bonner Springs, De Soto, Easton, Kansas City, Lansing, Leavenworth, Linwood, Tonganoxie.
- Linn County: Blue Mound, La Cygne, Linn Valley, Mound City, Parker, Pleasanton, Prescott.
- Miami County: Fontana, Louisburg, Osawatomie, Paola, Spring Hill.
- Shawnee County: Auburn, Rossville, Silver Lake, Topeka, Willard.
- Wyandotte County: Bonner Springs, Edwardsville, Kansas City Kansas, Lake Quivira.
Missouri Counties & Cities
- Cass County: Archie, Belton, Cleveland, Creighton, Drexel, East Lynne, Freeman, Garden City, Harrisonville, Kansas City, Lake Annette, Lake Winnebago, Lee’s Summit, Peculiar, Pleasant Hill, Raymore, Strasburg.
- Clay County: Avondale, Birmingham, Claycomo, Ectonville, Excelsior Estates, Excelsior Springs, Gladstone, Glenaire, Holt, Kansas City, Kearney, Lawson, Liberty, Missouri City, Mosby, North Kansas City, Oaks, Oakview, Oakwood, Oakwood Park, Pleasant Valley, Prathersville, Randolph, Smithville, Sugar Creek.
- Jackson County: Blue Springs, Buckner, Grain Valley, Grandview, Greenwood, Independence, Kansas City, Lake Lotawana, Lake Tapawingo, Lee’s Summit, Levasy, Lone Jack, Oak Grove, Sugar Creek.
- Platte County: Camden Point, Dearborn, Edgerton, Houston Lake, Kansas City, Lake Waukomis, Northmoor, Parkville, Platte City, Platte Woods, Riverside, Smithville, Tracy, Weatherby Lake, Weston.
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