A Business Owner’s Guide to COVID-19-Related Insurance Claims

A Business Owner’s Guide to COVID-19-Related Insurance Claims

McClure Insurance Investigates How Insurance Carriers May Respond to Business Insurance Claims Due to COVID-19 in Massachusetts

Even though there is still a great deal of uncertainty around the current coronavirus pandemic, our state and local leadership in the Springfield area have given some clear direction and guidelines on how people should be responding.

On March 13, 2020, Springfield Mayor Domenic Sarno declared a state of emergency temporarily closing all schools. Massachusetts Governor Charlie Baker recently issued a stay-at-home advisory requiring all non-essential businesses to shut down their facilities from March 24, 2020, to April 7, 2020.

As you are likely aware, decisions like these were made in an attempt to slow the spread of the coronavirus (COVID-19) and in response to the Center for Disease Control and Prevention’s (CDC) recommendation to practice social distancing. The goal is to flatten the curve of the outbreak, manage the number of infected people, and, hopefully, give some relief to healthcare providers who are currently feeling overwhelmed.

However, for many local businesses like yours, specific information on how you can better protect your employees, mitigate your business’ COVID-19-related risks, and sustain a revenue stream, has been relatively limited.

McClure Insurance is committed to providing you with as many helpful resources as we can to assist you in protecting your business, staff, and customers. We are always here to answer your questions to the best of our ability. Together, we will do our best to help you not only navigate this unprecedented situation but also monitor the insurance implications and if/how your current commercial policies may provide coverage.

Will any commercial insurance coverages respond to a COVID-19-related claim?

Workers’ Compensation and Business Interruption are two common commercial insurance coverages that most businesses carry. The McClure team is currently investigating these two types of coverages to see how they might respond to a claim by an employee or a business that results from COVID-19.

It is important to know that while workers’ comp and business interruption are fairly standard business insurance policies, no two commercial policies are exactly the same, and every carrier has its unique limits and exclusions.

For this reason, the information we’ve provided below is general. If you would like help understanding your individual policy and determining your business’ actual extent of coverage, please contact your McClure Insurance agent.

Workers’ Compensation Insurance

Workers’ compensation provides benefits to employees whose injury or illness is work-related. However, falling ill and missing work due to a virus, such as COVID-19, is likely not enough to initiate workers’ compensation coverage.

The coronavirus is a “human-based risk exposure,” meaning it is not directly linked to a specific type of occupation or job role, whereas contracting rabies is a known risk of working in animal control and mesothelioma cancer often affects people who have been involved in asbestos removal. From what we understand, the coronavirus is spread through person-to-person contact. According to the CDC, the spread can happen between people who are in close contact (within 6 feet) of one another and through respiratory droplets produced when an infected person coughs or sneezes.

It may not seem like it makes much difference how you get sick, but for your insurance carrier, it is a critical distinction. Workers’ compensation policies are written to respond to an injury- or illness-related claim only if the situation meets two criteria. The illness must be a direct result of either:

  1. The scope of an employee’s job
  2. The specific conditions presented by an employee’s job

Since COVID-19 meets neither of these criteria, it seems unlikely that your company’s workers’ comp policy will provide coverage to any employees who are ill or out of work due to the coronavirus.

However, there is one potential industry exception; employees in healthcare may be able to make a successful workers’ comp claim. For example, medical personnel, such as doctors, nurses, scrub technicians, and paramedics, who have been exposed to the contagious virus while performing their normal job functions may be able to get benefits if they end up sick and unable to work.

Business Interruption Insurance

This essential coverage is not a stand-alone policy; instead, it is typically attached to your business’ commercial property insurance policy. Standard business interruption insurance is designed to reimburse your business for lost revenue, as well as extra expenses, related to a halt in your operations due to physical damage to your building, machines, inventory, etc. Examples of events that should trigger your business interruption insurance include fire, a severe weather event, or vandalism.

As with most insurance policies, there are a few common exclusions in coverage. In this case, the most notable would be the exclusion for loss of income or extra expenses incurred due to contamination by a bacteria or virus. However, some carriers may provide coverage in the event of a government lockdown or mandatory curfew that results in a financial loss to your business. Unfortunately, at this time, carriers have not confirmed whether business interruption might be used to cover a COVID-19-related work stoppage or to recoup any of the resulting losses in business income.

Despite the apparent lack of coverage for COVID-19-related claims today, this situation is rapidly and constantly changing. We may have more definitive answers for you over the next few weeks as we continue to have conversations with our insurance partners. It is possible that, in the future, we will be able to direct you to an insurance option or government-subsidized program that will provide some coverage for affected employees or to reimburse lost business income.

How can business owners stay well-informed during the coronavirus outbreak?

You may have already discovered some of the best COVID-19 news and information resources out there, but we’d like to share how we have been staying up to date. The McClure team regularly checks in with reputable sources such as the CDC and the World Health Organization (WHO).

Below is a list of specific links from these organizations and others that we have found particularly informative:

World Health Organization:

Johns Hopkins COVID-19:

Above all, we want you to know that the McClure team is here to support you and share our insights and advice.

In compliance with Governor Baker’s recommendations, we are restricting public access to our office locations in West Springfield, Wilbraham, and Chicopee until further notice. Our team is still available to answer any business insurance-related questions and assist you with current or new policies during our regular business hours (8:30 AM – 4:30 PM).

There are many ways we can support you from the comfort of your own home during this unprecedented time:

  • You can file a claim or make a payment directly through your insurance carrier via our website
  • Changes and additions to your policies can be made over the phone or through email
  • A variety of helpful resources are available on our website, including essential insurance links and information, as well as relevant town websites

Most importantly, McClure Insurance is committed to being here for you and your employees today and in the long-term.

McClure Insurance is here for you for the long-term.