Insuring Against the Coronavirus
The pandemic caused by the coronavirus is ravaging the world economy. Unfortunately, with cases rising in Europe and the United States, the worst is yet to come. Supply chains are being disrupted, orders are being delayed or cancelled, and employees are working remotely.
Various industries are hard-hit right now but small businesses are affected by the pandemic.
Do You Have Coverage?
In the past few years, insurers have cut down the coverage which may be applicable for pandemics. Make sure that you assess how vulnerable your business is right now. Here are the types of coverage which you may have that can be used for handling possible losses because of the pandemic:
Business Interruption Insurance
You might Business Interruption (BI) Insurance as part of your first-property insurance or you might have it as a separate policy. This insurance covers losses suffered because of the shutdown caused by property damage.
The problem is that a shutdown caused by a lockdown policy in your area will not constitute property damage. But if your business is forced to shut down because of an infection caused in your business maybe because of the HVAC system or contamination of the surface, then this might apply.
Expect insurers to argue against your claim by saying that one of the main exclusions that they have may apply here.
Supply Chain Insurance
Also known as Contingent Business Interruption (CBI), this kind of insurance is meant to cover disruptions of the supply chain. It is meant to cover economic losses which may include increased prices of materials or no operations resulting from the interruption of the supply chain. There might be coverage for the cutting down of utility services and the absence of a market during periods of crisis.
It’s important to note, that CBI normally covers losses incurred from supply chain problems. Also, your suppliers must first suffer from the same property damage that is covered under your first-party policy.
Event Cancellation Insurance
If your business is in the entertainment or sports industries then you might have an Event Cancellation Insurance. This kind of coverage can be written specifically to cover cancellations that have been caused by the spread of infectious diseases.
Be aware though that some insurers have excluded the coronavirus from this coverage towards the end of last year. If your policy was written before the last quarter of 2019, then your Event Cancellation Insurance is unlikely to carry such an exclusion but you should check your policy to be sure.
Make sure that you have this coverage if there is a chance of your business being held liable for failure to protect against the pandemic. If you’re in the healthcare, retail, or hospitality industries then your business could be vulnerable.
This would cover your employees who suffered some kind of injury and illness while at work. Make sure that you assist your employee with a Workers Compensation claim by giving all the important details that they need.
You need to assess your exposure now to infectious diseases and see what kind of coverage you have. Difficult times are ahead and it’s important to know the type of coverage you can count on.