How Does COVID Affect Insurance?

Uncertainty in the wake of COVID-19 is off the charts. Everyone is quarantined. The stock market is volatile, and the end is not in sight. To add to the uncertainty for businesses, the C-Suite is curious how insurance will respond. In the last week have had an influx of insurance information related to Coronavirus or COVID-19. We have been keeping up with the info released by carriers, industry news and regulatory authorities as this unfolds. It is too early to determine how this will all play out, so we thought it could be helpful to summarize the information we have to date.

Will Business Income Help?

This is the top inbound question related to insurance. Business income is coverage provided in the property section of a standard Business Owners Policy (BOP) or a stand-alone property policy. For most policies the coverage is triggered when there is property damage, such as a fire or a hurricane, preventing use of the building. Many insureds are turning to this provision in the policy, but messaging from IIAT in this article, ‘Coronavirus and Business Income Losses,’ states otherwise:

“No, there is no business coverage is the short answer. Before business income responds, there must be damage to property, leading to the cessation of a business. This requirement applies to business income dependent property losses (supply chain) and civil authority losses covered by business income policies. Additionally, there is a specific property exclusion applicable to businesses that may apply. This is true of standard business income forms; there may be some proprietary forms that respond, but these are rare.”

Some carriers are willing to be as bold as to put verbiage out there instead of remaining silent. Here is verbiage from a well known carrier, but most carriers have had similar messaging to the following:

“Business Interruption Coverage: Most property insurance includes business interruption coverage, which often includes civil authority and dependent property coverage. This coverage is generally designed to cover losses that result from physical loss or damage to property and is not designed to apply in the case of a virus. Every situation will be looked into on a case-by-case basis. If you believe you have a business interruption claim, then please reach out to our claims experts for more information.”

How Are Carriers Responding to Financial Hardship

Carriers are aware this is a tough time for everyone. During this unprecedented time in history, here is how some carriers are responding:

Payment Flexibility

Some carriers understand these are tough times. One of our partner’s carriers, for example, offered up flexibility with billing or payment issues. They understand if you cannot go to your office, you clearly cannot get your bill.

Suspending Cancellations

Some carriers are also suspending cancellations as well. The number one reason we see for cancellation is non-payment of premiums.
Carriers, brokers and agents are encouraging insureds to file a claim if an insured feels there is a potential claim related to the Coronavirus. Even if you think the claims might be denied by your property carrier, put it in the claim. This might be a factor since many carriers will likely be in litigation over the response. It is unknown if there will be a government mandate requiring a carrier to pay claims related to Coronavirus.

In summary, these are unprecedented times, and insurance is no different. If you think there is a potential claim on any line of your coverage related to Coronavirus, get with your agent to put in a claim.

*** If you are a Lumen client, please feel free to fill out this COVID Related Losses form to start a claim with us.