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Thursday, 21 May 2020 17:56

Businesses Could Face Liability if Employees Test Positive for Coronavirus

Written by Dave Chmiel and Thomas Steinbrenner, PropertyCasualty360
The latest---and for many businesses, the most significant---fallout to the coronavirus pandemic is the business interruption it’s causing. The latest---and for many businesses, the most significant---fallout to the coronavirus pandemic is the business interruption it’s causing.


When endorsed into a policy, contingent business interruption coverage (CBI) may apply to losses due to the suspension of the insured’s operations caused by the direct physical loss of or damage to a dependent property, such as the premises of a key supplier, contractor or customer. There does not need to be damage to the insured’s property to qualify for CBI coverage. Rather, the insured would have to show covered property damage at the dependent property location, and at this point, contamination may not be enough to satisfy those requirements.


It is critical to talk to an insurance broker about your BI and CBI policy coverage to find out what parameters, limits and exclusions for viruses and pandemics are in place and what to look out for ahead of a potential claim.


What employers can do right now


So, you’ve closed your non-essential offices and moved most employees to remote work. Now is the time to prepare your internal systems and policies to further minimize liability. Consider the following best practices:


Author an emergency preparedness plan. If you don’t already have one, name a working group of employees from across your organization to create a business continuity, emergency preparedness and even pandemic reaction plan. Consider business interruption issues specific to your business and location and establish procedures that can be enacted on a moment’s notice.


Report claims immediately. Time is of the essence. Exposure and potential claims, whether WC or BI, must be submitted as soon as possible. This will allow for a thorough and efficient review of the case and all coverage scenarios. Like any other local state of emergency, as the COVID-19 pandemic spreads, claims have the potential to get backed up.


Review policies. Conduct a careful analysis of your current policies with your broker, both primary and excess. This analysis will reveal whether an event like this is covered by your insuring agreements, and which exclusions apply. Many factors will determine if a claim will be covered, including the type of loss, the type of coverage and the terms and conditions, including exclusions, for each policy. Understanding your coverage parameters upfront will eliminate the guessing game.


Beware of computer hackers. Cyber thieves are at work, and with employees working at home connecting to your network, there is the potential for a breach. Employees should be reminded to take precautions and beware of suspicious emails with attached links that, if clicked, may allow your network to be breached.


How COVID-19 claims will fully play out over the coming months is unknown. What we do know is that it’s very likely there will be many, as every business has been affected by the coronavirus. It’s time to prepare for business interruption and employee WC issues now.


We thank PropertyCasualty360 for reprint permission. 

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