Workers Compensation Claims and COVID-19
While so much of the economic impact to businesses stemming from the Coronavirus is seemingly uncovered by insurance policies, there are conditions under which employers may feel some relief. Workers Compensation is the area where we may see some coverage for a directly infected employee, if it can be proven the infection was contracted in the course of employment.
Currently, if an employee catches a common cold or flu, and thinks it was contracted from someone at work, there is no coverage. But, in this case, because Coronavirus is a specifically identifiable virus, if the employee can prove they contracted the virus at work, it could be argued as a work-related injury. Workers Compensation injuries and illnesses are specifically defined by Statutes of each State, so each Statute will need to be reviewed to determine coverage.
- If a worker contracts the Coronavirus but no direct line of infection can be discovered, it will not be deemed work-related and will not be covered.
- If the business, job site, or location is shut down because of an infection, and employees are told to stay home, that does not meet any definition of a work-related injury or illness, as this is a preventative measure, and Workers Compensation policies will not pay the employees or reimburse the business for the employees’ wages.
- While single location businesses normally purchase Business Interruption, many contractors do not commonly purchase Business Interruption polices, as their operations are in the field, and not from a specific office or location. So, with respect to jobsites being shut down at a customer’s site, there will be no coverage.
- For other business locations, like offices, retail stores, and manufacturers, that do have site-specific business interruption, they will also likely not be covered, as the event will not meet the definition of a covered peril or loss. In order for coverage to be triggered, most policies require physical damage to the premises. In case of quarantine or closing down locations, stores, or factories to stop the virus spread, there is no physical damage, and likely no coverage. In addition, as most carriers already have the virus exclusion mentioned above, that clearly eliminates any claim. Simply speaking, there is no policy specifically written to cover shutdown from a virus or quarantine.
Due to the fact that there will be no insurance solution for many businesses, some states and the Federal Government are looking at some form of relief to provide workers unemployment benefits as a result of being quarantined in homes or relief for businesses. This is in the works, but currently nothing is in place.
There are definitive losses that are occurring and will continue to occur, but again, insurance was not designed to cover a pandemic. Ultimately, this will likely be challenged in the courts, but it will be years before coverage issues are resolved.
Be sure to follow the CDC guidelines and educate your employees on how to practice good hygiene and stop the spread of the virus. For now, prevention is the best defense we have.
If you have a claim or find yourself with a shutdown or injured employee, you should still report this to us and your carrier, so a determination of coverage can be made. If you need assistance or have further questions, please reach out to your designated PSA team member or contact me at email@example.com.