Understanding your insurance during a pandemic.
With the onset of significant actions to prevent the spread of COVID-19 (coronavirus), BSI Insurance clients may experience the need to consider insurance to manage the implications of the pandemic. An insurance policy could respond in several ways to a pandemic and the effects it has on business operations.
Business Interruption Insurance
This coverage is the most obvious one that businesses will want to use as it is designed to cover for lost income when a business suffers an interruption to its operations. Business interruption insurance also has an extension designed to provide further coverage, contingent business interruption, for when an insured’s suppliers or customers are affected and there is a loss of income. However, business interruption coverage usually responds when a physical loss by a covered peril has occurred, such as water damage or fire. Thus, a claim due to COVID-19 would not typically be covered by most insurance companies under business interruption coverage.
The general exclusion for policies comes from interruption by order of civil authority. This is a change that became relevant and common after the 9-11 attacks and many insurance companies changed their wordings to reflect the new world conditions. Reviewing your policy wordings under the business interruption conditions should help determine if you are eligible to make a claim for business interruption. As of March 16th, 2020, there has been no civil order from the provincial and federal governments for a full quarantine and this would need to happen to trigger any business interruption claim.
Regular Property Insurance
Your business, building and contents will have had no change to their coverage as we have not received any communication from our insurance company partners nor do we expect any. Should your business be one that could be targeted for crime due to the pandemic, like a retail store, the coverages on your policy will remain in effect. In the highly improbable event of a riot or large-scale civil
disturbance there may be restrictions and it is best to consult your wordings.
If a business must close, there are steps you will have to take to ensure your insurance coverage stays in effect. These include: ensuring alarm system works and is on, making sure the building is kept at an adequate temperature to prevent freezing, furthermore regular visits to the business to make sure it is safe and all systems are functioning will likely be a condition in the insurance contract.
This coverage is designed to protect a business or person against claims that may come from others (3rd parties) should they be harmed. While it will be difficult to prove a business was at fault or caused the COVID-19 virus to be dispersed to someone else, having a proper safety protocol would be wise.
Taking an active position to ensure that a business is doing everything to comply with public health guidelines around the COVID-19 virus is the best form of prevention, both for spreading the virus and reducing any possible liability exposure. Discuss with all staff on how best to: keep a clean and disinfected workplace, workstations and customer areas, working with customers remotely, encouraging staff to stay home if feeling unwell, reviewing sick time policies, and develop work from home processes.
Here are the relevant government links to use for information during the pandemic.