In light of the coronavirus (COVID-19) outbreak, your independent agents at Seely & Durland understand the concern and uncertainty you are experiencing around the evolving situation, and we are committed to being flexible and responsive to our clients’ needs.
We continue to receive calls and emails almost every day regarding the insurance implications of the COVID-19 virus and pandemic. We will continue to provide you with relevant and timely information on how the coronavirus affects you, your family, your business, and your employees.
The focus of this post is to address recurring questions regarding business income and workers’ compensation. There is no doubt that small businesses are going to be adversely affected by this global pandemic. Unfortunately, the insurance industry is not providing the relief that we all wish it would.
Please keep in mind that social, health, business, economic, and regulatory circumstances are changing on a day-to-day basis due to the virus outbreak. We will make sure to update you on insurance-related questions and issues when new information is released or divulged.
Business Income / Business Interruption
One of the most common questions we’ve received over the past week relates to business income coverage — specifically whether there is business income coverage if a governmental authority (civil authority) requires businesses to close. Another common question is whether or not business income coverage will respond if they lose income as a result of decreased business or mandated business closures, with people avoiding public places and staying at home.
Unfortunately, the short answer is no. There is no business income coverage for either of the circumstances above. Before business income responds, there must be direct physical damage to property by a covered peril leading to the cessation of a business. This requirement also applies to business income for dependent property losses (supply chain) and civil authority losses covered by business income policies. Additionally, there is a specific property exclusion applicable to viruses that will generally apply. This is true of “standard” business income forms. There may be some proprietary forms that would respond, but we have not found any in our research. In addition, there are some insurance carriers who will add an exclusion for “communicable diseases,” broadening the standard exclusion to viruses.
Coronavirus as a Workers’ Comp Claim
The continuous global spread of the coronavirus has many employers curious if they would be held responsible if an employee contracts the virus.
It’s not likely that the coronavirus would create a workers’ compensation exposure at this time. That said, if the employee has an increased risk of contracting the virus due to the peculiarity of his or her job, the coronavirus could be considered occupational, and thus compensable.
What makes an illness an “occupational illness,” and therefore compensable under workers’ compensation? Or, more specifically, how might workers’ compensation respond to the coronavirus?
Two tests must be satisfied before any illness or disease, including the coronavirus, qualifies as occupational — and thus compensable — under workers’ compensation: A) The illness or disease must arise out of and be contracted in the course and scope of the employment. B) The illness or disease must arise out of or be caused by “conditions peculiar” to the work.
Whether an illness arises “out of and in the course and scope of employment” is a function of the employee’s activities. The simplest test toward determining whether an injury arises out of and in the course and scope of employment is to ask: was the employee benefiting the employer when exposed to the illness or disease? However, keep in mind this test is subject to interpretations and intricacies.
Something crucial to consider is that contracting the virus at work is not enough to trigger the assertion that it is a compensable occupational illness. To be occupational and compensable in the eyes of insurance companies requires something peculiar about the work that increases the likelihood of getting sick. It is unlikely that both the “occupational” and “peculiar” thresholds can be satisfied to make most illnesses compensable for the vast majority of individuals; the same is true of the new coronavirus.
Steps to Protect Your Employees
Health officials claim that those infected can spread the virus before they begin showing symptoms, which makes promoting healthy habits in the workplace crucial. Similar to most respiratory illnesses, the coronavirus can be transmitted through person-to-person contact and through contact with infected surfaces and objects. The Centers for Disease Control and Prevention (CDC) recommends taking these actions at your workplace:
- Keep supplies stocked. Make sure tissues, hand sanitizer, and soap and water are regularly stocked and accessible. If possible, make no-touch disposal receptacles available for use.
- Perform routine cleaning. Clean commonly touched surfaces regularly — even daily. Provide disposable wipes to employees so they can keep their workstations clean at all times as well.
- Ensure sick employees stay home. Employees should stay home if they are experiencing acute respiratory illness symptoms such as fever, cough, and shortness of breath, and they should not come back to work until they are symptom-free for at least 24 hours. If an employee appears to arrive to work sick or becomes sick during the day, he or she should be separated from other employees and sent home immediately. If you have contracted or temporary employees, talk to the companies that provide these employees to ensure sick workers stay home.
- Use virtual meeting options if employees are showing symptoms of respiratory illness. It is not too late for businesses to set up remote workforces, communicate with staff, and prepare for what appears will be a worsening outbreak.
- Be flexible with your sick leave policies. Make sure your sick leave policies are flexible and consistent with public health guidance and that employees are aware of these policies.
If you have any questions about the virus and how it relates to workers’ compensation, business income coverage, or any other insurance-related situation, please contact us at 845-986-1177. For more information on the illness, please refer to the CDC’s fact sheet or FAQ section of the CDC website.