The Novel Coronavirus and related COVID-19 pandemic has had an unprecedented effect on businesses across the country. Even “essential” businesses like construction have seen their businesses turned on their heads. These types of unpredictable events are the very reason that businesses carry insurance. What can your business do now to make sure that they maximize the insurance they have?
1. Put Your Carrier on Notice if You Have a Loss.
If you have property or business interruption insurance, and have a loss, put your insurance carrier on notice. We have seen some instances where because of media coverage, policyholders assume that they will not be covered by their policy. Some have reported that exclusions preclude coverage, or that the virus does not meet the requirement of a physical loss. However, property insurance policies, and particularly business interruption policies, have widely varying language. Some policies have exclusions for a virus, but others exclude damages stemming from “microorganisms.” Technically, a virus is not an organism, and those exclusions may not apply. Additionally, some policies only apply the physical damage component to the property coverage under the policy, and not the business interruption coverage. Still, other policies have coverage for contingent business interruption where the physical loss does not have to occur at the policyholder’s premises.
Additionally, as of the writing of this article, at least seven states had draft legislation addressing business interruption coverage for the COVID-19 pandemic, as well as the Federal Government. Even if your business does not have coverage now, that could change, and you don’t want to be left without recourse because you didn’t file a claim in the first place. The point is, it is important to have someone experienced review your policy, and you lose nothing by putting the claim in.
2. Don’t Sleep on Your Rights.
If you do make a property or business interruption claim, don’t sleep on your rights. Most property policies require the policyholder to bring a lawsuit within two years of their loss if the claim hasn’t been paid. In Minnesota, this two-year time frame is shorter than the typical six years you have to bring a breach of contract action.
3. Don’t Forget About Your Liability Insurance.
Property damage, income and profits are not the only potential losses your business could face. If you have been doing business during the pandemic, or as you slowly get your workforce back into the office or the field, there is a significant potential for liability. Customers, vendors, or other businesses you work with could bring claims against you if individuals become sick with COVID-19, and they can show that you were negligent in providing the necessary protections from exposure.
It is not just third-parties who could bring claims. Your own employees could bring claims if they are not provided with a safe work environment. They could also argue that they were constructively discharged or discriminated against because they were unwilling to work in an environment that they deemed unsafe. Even your own shareholders could bring derivative claims against the company’s directors and officers for failing to provide proper leadership in protecting employees or others. These claims could implicate commercial general liability, workers compensation, employment practices or director and officer insurance, just to name a few. The point is, now is the time to access your insurance program, before any claims come in, to be sure that you have adequate insurance and limits in place. If you are up for a policy renewal, make sure that the insurer is not inserting new exclusions into your liability policies.
Insurance is meant to be there for your business when you have unexpected losses. Make sure you are taking the necessary steps to maximize your ability to recover any losses.
Chris Yetka is a Shareholder and head of Larkin Hoffman’s Insurance Coverage and Advice practice group. He or another member of their group are available to answer any insurance questions you may have.