Is Your Business Covered for Pandemics Like COVID-19?

Posted in: Commercial Insurance

There’s justifiably a lot of fear and concern swirling around the news of a fast-spreading contagion—COVID-19, also commonly referred to as Coronavirus. Not only can this new contagion purportedly have a long incubation period without symptoms, there are still unknowns related to means of transmission and a lack of reliable data as to infection rates and mortality.

As a business, what can you do to prepare, what are your responsibilities, and what might your insurance policies cover when it comes to your employees and your operation? What implications might this have on the economy and insurance markets for your next property and casualty insurance renewal?

Prevention and preparedness

The CDC always recommends basic preventive actions to avoid the spread of respiratory viruses, such as the Novel Coronavirus. As a business, you may want to encourage employees to stay home if sick and to follow the other CDC recommendations mentioned in the link above.

Additionally, as with an approaching hurricane or any other type of potentially impending disaster, it makes sense to prepare as much as possible. This is a good time to confirm you have the latest home/cell phone numbers for employees, and if possible, there is a way to work remotely while maintaining communication and productivity throughout your business. Where people must be physically present, have an established sick day policy and supplies to wash and disinfect surfaces available to prevent the spread of illness between employees and/or to the public.

Insurance coverage

For many states, statutory workers compensation policies include coverage for disease to employees when contracted through working at your business, although this would be difficult to determine. If the disease (in this case the Coronavirus) was not contracted through work, health insurance can apply through employee benefits programs.

Foreign package policies often provide medical assistance services including evacuation and employer’s liability for bodily injury by disease in conjunction with international travel for business.

If you are hosting conferences or events and purchase event cancellation insurance, there will likely be an exclusion for cancellation regarding any infection or communicable disease. Special event liability policies may provide liability protection should attendees contract the Coronavirus while on the premises used for the event.

There may be limited business income/interruption coverage for disease depending on your policy. Check with your advisor to see if your policy includes coverage for diseases within a certain proximity to your location or for government restriction of access to your business. For contingent business interruption coverage to apply, direct physical loss to a supplier is generally required, and so, financial loss resulting from the inability to supply a customer or from a supplier to supply your business is unlikely to be covered under most policy forms.

General liability requires evidence that there is a link through your business/employees to customer/public illness. Establishing this link is a difficult litigation hurdle for potential plaintiffs. To be on the safe side and boost your business’s defenses, enact a clear and enforced pandemic policy (e.g., policies that aim to prevent transmission and to keep sick workers home).

Insurance markets and your renewal

You can be certain that underwriters will be carefully following the progression of COVID-19 and how it may affect the businesses that they insure, the economy, and the insurance markets. Insurers may consider exclusions, coverage limitations, and/or rate increases for certain industries and locations.

As you approach your business’s property and casualty annual renewal date, it is important to strategically position your business in a positive light as prepared. How? Ensure that pandemic policies and plans are up to date and that a fluid business continuity model (a plan B in case you can’t conduct business as usual due to a Coronavirus outbreak) is in place for addressing employee and public health, as well as for protecting revenue, assets, reputation, and brand.

While there are many potential implications of COVID-19, there are preparations and plans that can be made now to help your business weather the storm. For questions or assistance reviewing your account and coverages as it relates to pandemic coverage, contact me at or your designated PSA team member.


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