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Schatz & Associates Insurance Blog

All You Ever Wanted to Know About Insurance

COVID-19

Here is some information from Society Insurance:

Given the fact that COVID-19 has reached pandemic status, and some states have taken steps to limit operations of certain businesses, I wanted to provide some guidance on questions you might have. 

I’ll address both first-party property coverages and third-party liability coverages. while the current circumstances are unlikely to result in facts that support first-party coverage under our policies, or liability to a policyholder, we encourage any policyholder or third-party claimant who wishes to present a claim to do so.

This is how various coverages would likely respond to COVID-19 claims:

FIRST-PARTY CLAIMS

Business Income coverage:

Whether it be a full shutdown of business, a partial suspension of operations or an alteration in business operations that remain open, Business Income coverage must be due to a suspension caused by direct physical loss of or damage to covered property at the described premises. The loss or damage must be caused by or result from a Covered Cause of LossExtra Expense coverage also requires the same coverage triggers. In general, a quarantine of any size, or brought about by a governmental action without a Covered Cause of Loss, would likely not trigger Business Income or Extra Expense coverages.

Civil Authority coverage:

Civil Authority additional coverage pays for actual loss of Business Income and Extra Expense caused by an action of civil authority that prohibits access to the described premises when a Covered Cause of Loss causes damage to property other than property at the described premises. A widespread governmental imposed shutdown due to COVID-19 (coronavirus) would likely not trigger the additional coverage of Civil Authority.

Product Spoilage coverage:

Product Spoilage requires a specific and unique Spoilage Covered Cause of Loss. These are a change in temperature or humidity due to a mechanical breakdown or failure of equipment, or contamination by a refrigerant or power outage. Any alleged COVID-19 (coronavirus) exposures or spoilage from the extended shelf life of a product is not a Spoilage Covered Cause of Loss.

THIRD-PARTY LIABILITY AND WORKERS COMPENSATION

Liability Coverages:

General liability coverage applies to bodily injury caused by an occurrence. COVID-19 illness allegations presented by third-party claimants would be considered on an individual basis. An important element to proving liability would be evidence that an illness occurred due to exposure at a particular business, and that the business was negligent in allowing the exposure. Both of these would be very difficult to prove in a community-spreading viral outbreak. Allegations of bodily injury by third parties should always be referred for review, but it’s unlikely negligence could be substantiated.

Workers Compensation: The burden to prove that Workers Compensation benefits apply for COVID-19 would be very difficult. Disease claims have specific elements outlined within the Workers Compensation statute necessary to find a claim compensable. These elements would include, but not be limited to, the following, as each state may have additional tests to be met. First a worker must show their job is at a greater risk to exposure than the general public. A worker must also show they contracted COVID-19 while in the course of their employment, and it must arise out of their employment. Both arising-out-of and in-the-course-of tests are required to find compensability. Once again, this is difficult to establish in a community-spreading viral outbreak, but all purported claims should be referred.

Please visit our claims page on the website if you wish to file a claim with your carrier. https://www.schatzins.com/service-center/claims-payments

For more information regarding COVID-19 please visit the CDC website: www.cdc.gov/COVID19 

-Schatz Insurance