The evolution of the Coronavirus has led to more complex questions than answers and every day brings new developments on how to handle related losses. And while all industries have been impacted by the pandemic, perhaps no industry has been hit as hard as hospitality.
With the steady rise in claims, coverage for risks related to the coronavirus are cautiously and thoroughly being analyzed on the basis and extent of the policy language. However, the carriers are increasingly adding broad exclusions for the coronavirus to their policies. Nonetheless, policyholders should report claims relating to the coronavirus to their carriers immediately. Time is of the essence. Exposure and potential claims need to be submitted as early as possible, given the rapid changes in the pandemic and responses to it.
Many factors are involved in coverage analysis discussions, including the type of loss, the type of coverage and the terms and conditions of specific policies. Every case is being treated on its own merit and coverage decisions ultimately lie with the carrier. Alternatively, businesses may be able to pursue government relief programs as they become available.
Here are items to consider from a select group of policies:
Workers’ Compensation
Workers’ Compensation (WC) coverage is specifically aligned with state and jurisdictional guidelines. Was the disease contracted during course of employment and/or was it contracted due to conditions peculiar to the work? Employers need to address their respective state WC laws as this is interpreted. Claims arising from employees going to work are to be documented and reported to your carrier immediately for their review.
WC laws will not address COVID-19 directly, unless a state has taken specific steps to address the question of coverage for employees unable to work due to the virus. In general, the state laws do not address the question of employees exposed due to the nature of their employment and/or traveling overseas. Each state will have their own response to the crisis.
Business Interruption / Property
Business interruption (BI) coverage historically requires a degree of damage to the insured’s property. At this time, the carriers have not recognized that contamination constitutes damage to the insured’s covered property. As BI coverage requires some damage to the insured’s property, supply chain and similar business losses are not likely to be covered. The closure of restaurants per state will continue to be monitored for carrier responses to coverage. Federal programs are also under consideration and may provide some relief, once a state has been declared a disaster area. This could include the availability of small business loans.
Steps taken to continue in business despite the lack of supplies should also be recorded, for submissions to the carrier or government agency. This includes additional costs of using substitute supplier or a cost of changing operations to continue in business, including modifications in process or materials used or change in business plan. Documentation is paramount in the process.
Liability Claims
Third-party liability claims for bodily injury are being filed against policyholders for failure to mitigate or warn others of risk of contamination. These claims should also be submitted to the insurance carrier, even though many general liability policies have an exclusion for bacteria, viruses or the coronavirus.
Shareholders may sue corporate officers for economic loss resulting from inadequate response to coronavirus. Most Directors’ & Officers’ (D&O) policies exclude bodily injury and may also exclude virus related claims. Check these policies for pollution, bacteria or virus exclusions.
Cyber
Individuals are strongly urged to be extra cautious when opening emails as phishing scams may develop because of the Coronavirus. There is a need to be cyber vigilante at these times as cyber criminals’ prey on opportunities and general public fear.
Event Cancellations
The cancellation of large events due to the coronavirus have caused large losses under event policies. An event policy allowing coverage due to the cancellation of a large event is being reviewed by carriers in connection with these claims. If the event was due to take place in a country subject to travel bans or limits on public gatherings timely filing with the carrier is essential. However, carriers are excluding the coronavirus from several of these policies.
Speak to your insurance broker about your insurance coverage to minimize the potential negative impact of COVID-19 on your business. Stay safe and we will get through these times together.
On-Demand HUB Hospitality Industry Webinar “COVID-19 and Beyond”:
As the hospitality industry looks to reopen their doors, HUB International held a hospitality industry webinar where our expert panel answered key questions that are top of mind for owners and operators, including important questions around the Paycheck Protection Program (PPP), employee & customer safety and other operational issues. Please CLICK HERE to access the on-demand webinar recording.
For the latest information, guidance and resources on COVID-19 to help you protect what matters most, please visit www.hubinternational.com/coronavirus.
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