COVID-19 is forcing US businesses to face a number of insurance implications, and you maybe wondering if any of your policies will pay for claims resulting from the outbreak.
The main lines of insurance that may come into play are:
- Business interruption coverage
- Workers’ compensation insurance
But as always, insurance policies are specific in what they will cover. That’s why we are providing you with this explainer.
The key requirement for a compensable workers’ compensation claim is that the injury or illness arose “out of or in the course of employment.”
That wording makes it difficult for most workers to file a claim if they suspect that they got the virus at work, presumably from another employee or a customer.
Under state workers’ compensation law communicable diseases are typicaly considered non-compensable since it would be difficult to prove if an employee contracted the disease at work or in another setting altogether.
A coronavirus claim could be compensable in the following situations:
- Anybody working in a setting where there are patients being treated and tested for the coronavirus would have a strong claim if they contracted the virus. This would include clinics, doctor’s offices and hospitals.
- Personnel who have traveled abroad on business and upon return discover that they have fallen ill and contracted COVID-19. They could file a workers’ comp claim since they likely caught it while on the trip, which would technically be “arising out of or in the course of employment.”
State laws governing workers’ compensation insurance limit how a policy can apply coverage to employees outside the U.S.
If you have employees that are traveling extensively or are working on assign- ment abroad, you may find they are not covered by your workers’ comp policy.
Business interruption coverage replaces income that was lost due to a disaster, such as a fire on the premises of the company or one of its suppliers, or a hurricane that hinders a company from operating.
It is a common coverage on a business owner’s policy or commercial property policy. But in this case, it’s unlikely the policy would respond to a business interruption claim.
Most policies require that there be direct physical loss or damage to either your premises or some part of your supply chain in order to trigger business interruption coverage.
Without that trigger, insurers would likely argue that a virus in your facility is not physical loss or damage.
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