Now declared a pandemic, the global spread of COVID-19 has officially become a public health crisis. Additionally, the impact of COVID-19 on businesses has created uncertainty in the economy. Trade shows, conventions, business trips, major sporting events and vacations have been cancelled. People are staying away from restaurants, malls and gyms. We can expect to see heavy losses in many sectors.
Consumers are also stockpiling basic supplies, worried that they’ll get sick and need to be quarantined, or that necessities won’t be available down the road. This is making it difficult for health care providers who are facing shortages of key items, such as masks and cleaning supplies.
The business interruptions and other losses due to COVID-19 are projected to be in the billions of dollars. Those figures don’t just include big business; they include the small businesses you support in your local community as well.
If you’re a business owner, you’re taking precautions to protect your employees, and you’re probably also wondering why type of coverage your business insurance offers, as well as if the government is going to provide any financial relief. Let’s discuss this.
Protecting Your Workforce from COVID-19
Companies are faced with the need to change the way they regularly operate and take more precautionary steps than they might have previously. Here are some guidelines to help you protect the health, safety and well-being of your employees.
Allow employees to work from home whenever possible. The more we “socially distance” ourselves, the less the virus will spread. It’s easy to keep in touch via email, cell phone and telephone or video conferencing platforms, so if your company is able to do this, it’s worth considering.
Suspend all unnecessary business travel. Again, consider using telephone or video conferencing platforms. And, if you have employees who have traveled outside of the country during the last 14 days, ask them not to come in to work.
Tell employees that if they have any flu like symptoms, such as a fever, cough, fatigue, shortness of breath, that they need to stay home. COVID-19 is highly contagious. No one should be risking the health of others around them.
Sanitize and disinfect your office on a regular (and frequent) schedule. Disinfecting helps prevent the spread of harmful bacteria and viruses by destroying most of the disease-causing germs that remain on surfaces after cleaning.
Ask employees to wash their hands when they come into the building and again when they leave. Promote frequent hand washing throughout the day, for at least 20 seconds each time. Make hand sanitizer available throughout your office.
Follow “social distancing” guidelines. Avoid situations where there will be large crowds. Skip the handshake for now.
Wipe down your cell phones. Cell phones are much dirtier than most people realize. Read this article for more information on how to clean it properly: https://www.google.com/amp/s/nypost.com/2020/03/13/how-to-clean-germs-from-your-smartphone-without-damaging-it/amp/
Avoid touching your face. This sounds easy until you start keeping track of how many times you do this. The average person touches their face 23 times an hour! Microscopic organisms on your fingers can enter your body through the nose, eyes and mouth.
Eat healthy and exercise. These are both important to a strong immune system. Moderate, consistent exercise is best. This is not the time to start intense workouts if that’s not the type of schedule you’re used to.
COVID-19 Business Insurance Coverage
Another impact of COVID-19 on businesses is insurance coverage. You’re probably wondering right now if you have coverage for loss of income if your business is required to close, or if there are insurance ramifications if one of your customers or employees becomes infected with COVID-19.
Property Insurance If you had a windstorm, and a tree went through your roof, most likely you’d be covered for the physical damage caused. If you had to close your business while repairs were being made, you’d have a business interruption. Business Interruption Insurance is an add on (or endorsement) that is commonly added to a business property insurance policy. If you had this type of endorsement on your policy, you’d be covered for the loss of business sustained due to the physical damage. Unfortunately, business losses sustained for a closure due to a pandemic like COVID-19 are not normally covered under your property insurance with a Business Interruption add-on, even if a civil authority like the state or the town health department mandated the closure.
A case might be able to be made for a business holding a Contingent Business Interruption endorsement on their business insurance property policy. Contingent Business Interruption is a specialized insurance endorsement, typically coming into play when losses to the insured are the direct result of business disruptions of the business’ customers and suppliers. Businesses in the service industry usually do not have this type of endorsement on their policy.
A typical example would be a manufacturer who can’t manufacture a particular part because the supplier of a key part needed is shut down due to a damage loss to their company. The key to coverage here is that the damage to the customer or supplier MUST be a type of loss covered by your business insurance property policy. So, if the supplier of that key part was shut down because of damage sustained during a windstorm, the manufacturer would likely be covered for business losses because the manufacturer’s property insurance would cover that as well. But let’s say the damage to the supplier was due to an earthquake. Earthquakes are not typically covered under a regular property policy and would need a special add-on rider or endorsement. The manufacturer waiting on those parts would need to have earthquake coverage itself in order to be covered for their own business losses.
Business losses for a closure due to disease caused by a pandemic is more of a grey area. There is no actual property damage, in the true sense of the word. But some courts have held that fear of contagion in a workforce, contamination of the workplace, or if a civil authority such as the state or the health department forces a business to close, and that business has a Contingent Business Interruption endorsement on their property policy, coverage could be argued. Usually though, this type of interpretation is just that…an interpretation. Your insurance professional will present your case and fight for you, but there’s a chance that you may not win. However, this is one very good reason to work with a local insurance professional. A local insurance agent knows your face and name…you’re not just a number to them.
Casualty Insurance This type of insurance includes liability protection if your company is found to be legally responsible for injuries to a person (or damage to their belongings). In the case of contagion, it would require a case-by-case review to determine coverage, actual liability and damages. We feel it would be somewhat difficult to prove that a particular company was the sole source of contraction of an extremely contagious virus like COVID-19.
Workers’ Compensation Unfortunately, in order for workers’ compensation to cover exposure to the coronavirus, not only would the exposure have to arise out of the workers’ employment, but it would also have to be in the course and scope of their employment when the exposure took place (e.g. a nurse at the hospital treating a coronavirus patient). Typically, a person who was possibly exposed at their workplace would not satisfy the requirement needed for workers’ compensation.
Financial Relief is on the way from the Small Business Administration
The good news is you may be able to get some financial relief from the Small Business Administration.
SBA loans will be available for businesses impacted by COVID-19. These loans, which will be provided to sole proprietors, and small and medium-size businesses, will provide the working capital needed to meet payroll, handle loss of business and delayed payments, as well as manage supplier issues.
How this will work: Your business must be located in a county that is approved by the SBA for an Economic Loss Declaration, which is requested by your governor. Once counties are approved, economic injury assistance will become available to businesses in that county, as well as bordering counties. There is a catch though. Loan assistance will only be provided to businesses that are unable to secure loan funding in other ways.
Tax holiday for businesses Business owners will be allowed to defer taxes due on April 15 for 90 days without interest or penalty, freeing up money to help them with their business needs as well as giving the economy a boost.
We know there is a lot of uncertainty with the COVID-19 public health crisis, and we hope we have been able to answer some of your questions here today. If you have any questions about anything we’ve discussed, ask your insurance professional at Nicholas/Tobin Insurance.
Nicholas/Tobin Insurance, located in New Milford, Connecticut, provides its clients the highest quality insurance products and services available today to protect them, their families, and businesses. We offer homeowners insurance, renter’s insurance, car insurance, business insurance, travel insurance and more! Our commitment to service means our team of licensed insurance professionals is here to help with simple policy questions, consult with you to determine appropriate coverage and be available 24/7 when trouble strikes, and you need assistance managing through the claim process. We’d love to be your local insurance agency…we’ll be there for you every step of the way. To make an appointment, call us at (860) 354-4466.