Business Insurance and the COVID-19 Coronavirus Pandemic

Layr is closely following the effect of the coronavirus disease (COVID-19) on small businesses across the nation. We know many of our customers and small business owners have questions about how their business liability insurance might respond as they are impacted by this public health emergency. Additionally, we’ve published a crisis communication guide for business owners who may be looking for help communicating with their customers and stakeholders about this unprecedented situation.

What is the COVID-19 coronavirus pandemic?

In December 2019, a novel coronavirus resulting in pneumonia and respiratory distress began appearing in Wuhan, China. By January 2020 when statistics and reports around the new disease began coming to light, the severity of the epidemic along with the threat posed to the rest of the world quickly became clear.

The disease was first reported to the World Health Organization on December 31, 2019, and by January 30, 2020, it had been declared a Public Health Emergency of International Concern, a formal declaration from the World Health Organization. In the weeks that followed, the disease spread around the world at an unprecedented speed, ultimately evolving into a full-fledged global pandemic. In response to the global threat COVID-19 poses, governments have been left with no choice but to react with drastic containment and mitigation efforts that include halting travel, closing borders, shuttering all non-essential businesses, and ordering citizens to remain confined to their homes indefinitely. The unprecedented measures being taken to protect humanity during this rapidly evolving situation are putting an immense strain on economies and the companies that power them. Small businesses, in particular, are being impacted severely and entrepreneurs and employees everywhere are anxiously waiting to see what forms of relief will be made available to assist them financially.

At Layr, we’re committed to keeping a finger on the pulse of our customers and the broader small business community. With so much uncertainty around what the future holds, we are dedicating ourselves to maintaining this article as a trustworthy and reliable source of information around how business insurance likely will or will not respond to pandemic-related losses and claims. While we cannot guarantee the outcome of any commercial insurance claims that result from COVID-19, we will do our best to communicate our interpretations of relevant policy wording along with any information or guidance we receive from our insurance carrier partners and the broader insurance industry network.

Common Questions Related to Business Insurance

Below is an evolving list of questions about common business insurance policies and how they relate to the potential negative impact of this pandemic. Layr cannot, with certainty, advise whether or not a particular policy will respond to COVID-19 related claims. We are working closely with our carrier partners to gain a better understanding of how this unprecedented event will be addressed. We will update this page with new information as it becomes available.

Will my General Liability Insurance cover my business if it’s impacted by the COVID-19 Coronavirus pandemic?

Global COVID-19 Cases

local_hospital 4.5M+

Worldometer

Coronavirus Pandemic Tracker

Your General Liability (GL) insurance policy protects your company from third-party bodily injury, like a customer slip and fall, third-party property damage, like damage your company causes to the property of others, reputational harm, like the defense costs if someone sues your company for slander or libel, and advertising injury, like claims against your company for damage related to how you advertise your products or services.

Because the COVID-19 pandemic was not an event triggered on your company’s premises or by your company, it does not activate the bodily injury, property damage, reputational harm, or advertising injury coverage. As a result, the pandemic does not meet the threshold for a covered cause of loss and would likely not be covered under your General Liability policy.

Will my Umbrella Insurance policy cover my business if it’s impacted by the COVID-19 Coronavirus pandemic?

Umbrella Insurance policies are form-following, meaning they follow, or respond in addition to, other specific liability policies in place. For example, an Umbrella policy will follow a General Liability (GL) policy and provide additional coverage when the limits of the General Liability policy have been reached. As a result, if the General Liability policy responds with coverage, then any active Umbrella policy would likely follow and also respond.

Because it is unlikely that COVID-19 would be covered by your General Liability policy, it is also unlikely that the pandemic would be covered by your Umbrella policy.

Will my Workers’ Compensation Insurance policy cover my employees if they are impacted by the COVID-19 Coronavirus pandemic?

Workers’ Compensation Insurance provides coverage to employees for injury or illness sustained “on the job” or while providing work-related duties. The coverage will respond to employees who experience infectious disease contracted while performing their respective job functions. However, COVID-19, while a pandemic, would likely be interpreted by the insurance companies in the same way influenza would be interpreted. As a result, at this time, it is likely that your Workers’ Compensation Insurance carrier would refuse to cover claims including costs associated with medical treatment, lost wages, and other employee benefits.

Where possible, encouraging employees to work from home is strongly recommended and seen as a key strategy for minimizing any negative impact on business operations arising from employees contracting the coronavirus COVID-19.

Will my Property Insurance policy cover my business if things like equipment or inventory are impacted by the coronavirus COVID-19 pandemic?

Property Insurance covers your company’s building and its contents and physical assets. Specifically, commercial property insurance policies protect physical assets from events including fire, explosions, burst pipes, storms, theft, and vandalism.

If your business experiences property damage resulting from a covered loss, like the ones listed above, while closed as a result of the coronavirus COVID-19 pandemic, your commercial property insurance policy would likely respond. For example, your storefront or restaurant is closed in the coming weeks as a result of social distancing or lockdown orders by local, state, or federal governments. When you return to reopen the business, you find that your property has been vandalized. Your property insurance policy would respond to cover the losses incurred as a result of the vandalism that took place while you were closed for the pandemic.

While closing your business as a result of the coronavirus COVID-19 pandemic is not a triggering event by itself, as described above, your property insurance policy would likely respond to cover any damage to business property or physical assets while closed. Losses or interruptions including lost inventory from suspended shipments, perishable inventory spoiling, or property decay from prolonged closure, would likely not be covered by your property insurance policy.

My company is losing customers and sales as a direct result of the COVID-19 Coronavirus pandemic. Is lost revenue covered by any insurance policies?

While there is coverage available within most Property Insurance policies and Business Owners Policies (BOP) for loss of income, the lost income must be triggered by a covered event. Unfortunately, most commercial insurance policies that provide Business Income Loss coverage specifically exclude losses caused by an infectious disease or pandemic. Further, Business Interruption Insurance is coverage for loss of income suffered when damage to a company’s physical premises causes a slowdown or suspension of operations. As explained in the General Liability Insurance section above, the COVID-19 pandemic will likely not be considered a covered event and as a result, any lost income coverage would not be triggered as the lost income is not a direct result of physical damage to your company’s offices or facilities.

What is the broader insurance industry doing to help businesses affected by the coronavirus COVID-19 pandemic?

It was recently reported by Insurance Journal that the property and casualty insurance industry has submitted to Congress a proposal recommending federal assistance through the creation of a new mechanism that would essentially fund business interruption claims for small businesses affected by coronavirus shutdowns. Under most business insurance policies purchased by companies, business interruption claims as a result of communicable disease are excluded. This exclusion prevents the millions of main street businesses forced to shut down as a result of the current pandemic from recovering lost income. Under this proposal brought forth by the leading insurance industry trade associations, that exclusion could be waived, opening the door for businesses to file claims which would then be paid out of the new federal recovery fund.

If the proposal moves forward, it would be a great example of the existing private sector working alongside the government to efficiently deliver relief to the tens of millions of small businesses who have been forced to close their doors and are struggling to make payroll and cover their operating expenses.

How to Connect with the Layr Team for Business Insurance Support

We are committed to providing you with the best quality service and support. As your modern, tech-enabled insurance broker, our self-service portal is available 24/7 should you need to manage your business insurance for reasons related to COVID-19 or any reason at all.

If you are a current Layr customer, please don’t hesitate to open a support ticket with any questions that remain unanswered. Our small and mighty Insurance Team will respond to every inquiry we receive. We are working to respond as soon as possible, and given the nature of this unprecedented event, our responses may take longer than usual.

Our team will also be at the ready to answer phone calls, respond to questions, and troubleshoot. You can connect with us via phone at +1 (888) 897-4428 Monday through Friday from 9:00am until 4:30pm ET.

Resources

As a company, we pledge to never intentionally publish deceptive or misleading statements, website content, or advertisements. We’ve compiled a shortlist of links from nationally and internationally reputable sites to help you and your team navigate the time ahead.

• Coronavirus Disease (COVID-19) Outbreak
  World Health Organization
• Resources for Businesses and Employers
  Centers for Disease Control
• Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19)
  U.S. Small Business Administration
• Responding to the Coronavirus
  U.S. Chamber of Commerce
• Twitter List of Business Insurance Carrier Providers
  We are working closely with our carrier partners and monitoring their official communications via Twitter. You can follow our list for official updates.