COVID-19 has affected my business. Now what?

If your business has been interrupted or if you have questions and are preparing your contingency plan in the event of closure, please give us a call, we will review your specific policy, answer questions and help in any way we can. 

Please find below a few common questions you may have, but for more clarification, please contact us.

I’ve been forced to close down my business because of COVID-19 – can I make a claim against my business interruption insurance?

The answer is probably not. Business interruption coverage comes from your property policy, so the trigger of your business interruption insurance is a physical property loss. The fact that your business is interrupted due to COVID-19 will not trigger the policy the way a fire burning down your building would.

There are arguments that in the event your business must be evacuated & disinfected because someone who had contracted COVID-19 came to work, your property policy may be triggered and provide you with business interruption coverage, which includes both lost profits and the costs associated with things like setting up an alternative workspace while your contaminated space is being remediated.

What constitutes an underlying property loss may be unclear depending on how a policy is worded and many policies contain specific contamination exclusions. 

There are some policies that may have a low sublimit (meaning something less than the full limit of coverage under the policy) that will pay out if your business is shut down due to a communicable disease. Keep in mind that although there may be some coverage in a highly customized policy, the sublimit will be very small compared to the overall limit (think something like a $10,000 to $50,000). The vast majority of property policies, however, will not have this explicit coverage, even on a low sublimited basis.

Another theory for coverage that may emerge for a business interruption policy will be if civil authorities shut down access to your property. With that said, civil authority coverage will generally only apply if the peril in question is covered (e.g. If the civil authority blocks access to your property due to the threat of fire, you would have coverage. On the other hand, there is typically no coverage if the issue causing the civil authority to take action is the coronavirus because communicable disease is likely not a trigger for coverage under your property policy). If you do have this coverage, it is again likely to be only a small sublimit of coverage. Carriers providing coverage for this event are limiting it to owned and or occupied locations.

It should be noted that there are industry-specific, specialized policies that contemplate coverage in the case of a problem involving a communicable disease. For example, someone in the hospitality business and these specialized policies may not need an underlying property loss to be triggered.  

Is there an insurance response if my employees become ill?

As you expect, the health insurance you provide employees would be expected to respond to the coronavirus as it would any other illness.

If an employee contracts COVID-19 as a result of a work-related activity, your liability to your employee is covered by your no-fault workers’ compensation policy, with each province dictating the level by statute. Whether something is a work-related activity can be an open question. If something isn’t a work-related activity, an employer wouldn’t be liable for the harm caused by the activity.

The caveat to that is if you put your employees in harm’s way in a manner that is inconsistent with their normal job, the employee might sue you for having created an unsafe work environment. This suit would be covered by your employer’s liability insurance, the ability to recover from insurance is subject to the limit purchased, including any umbrella/excess liability. It should be noted that these types of suits are not often successful. In addition to the limit of insurance provided by your employer’s liability insurance, your corporation’s umbrella liability policy is part of the limit of insurance you purchase to cover this type of exposure.

What if a customer says that my product gave them coronavirus? Or that they contracted coronavirus while visiting our business? 

Should a claim like this arise, the products liability/liability portion of your general liability policy would respond. Going forward, however, it’s a good idea to keep an eye on the language in these policies to ensure that no new viral/bacterial exclusions pop up, causing a problem in the future.

While somewhat operational, these are all good questions for a board to ask as part of its role when it comes to overseeing a company’s enterprise risk management efforts. And certainly, when a board asks these types of questions, it may be helpful to have board meeting minutes that reflect the board’s diligence in this regard.

If your business has been interrupted or if you have questions & are preparing your contingency plan in the event of closure, please give us a call, we will review your specific policy, answer questions and help in any way we can.