I received my first insurance call regarding the COVID Coronavirus 1 month ago. The worried business owner said “I run a cleaning service, how will my business survive if people won’t let us in their homes to clean? Don’t I have insurance for Loss of Income?” I could fully understand the business owner’s concern and it made me stop and think, is threat of disease a covered risk similar to a catastrophic fire or hailstorm? If it were, there would be loss of income coverage up to a year. Since that phone call 1 month ago today, we have had countless calls with the same questions from our bar, restaurant, hotel and B&B clients. Unfortunately the answer has been No, currrently there is no Loss of Income coverage for this particular risk. There is no coverage for “threat of Illness” specifically named on a standard Business Owners Policy (For additional information on what a covered peril is: Click Here)
Despite all of the cancelled events, cancelled travel, and loss of income – don’t expect to see many claims pay out. Insurance companies have learned from past outbreaks, e.g. SARS and H5N1 Bird Flu and many policies will either have particular exclusions for this type of event or will not name it is as covered peril/hazard. That is not to say that insurers are not under pressure to pay these claims out; they are. However economic impacts of paying out these Loss of Income claims for insurance companies could "destabilize the entire economic landscape" and push many into bankruptcy. This could make it difficult for the average business or homeowner to afford any insurance in the future as they would have less companies to choose from and premiums would skyrocket to compensate for these past losses.
Presently, a business owner has to absorb this risk as part of normal business operations; e.g. when the economy slows down or clients simply choose not to purchase your product there is no insurance coverage to cover these unfortunate losses either. Many are hoping the Government will step in and help.
Only very certain types of insurance policies will see claims and be obliged to pay with regard to COVID Coronavirus. Health Insurance, Workers Comp insurance (if it can be proven beyond reasonable doubt that the illness was contracted on the job) and Event Insurance (wedding, sports event, conference etc.) are all examples of possible covered policies. The Tokyo Olympics are an example of Event insurance, assuming there is no exclusion in the policy, insurers could be looking at over $2 billion in losses and have a global financial impact. The Wimbledon Tennis tournament is another example of such an event that does indeed have a Global Pandemic listed as a peril on the policy.
Is there anything I can do to lower my insurance bills during this difficult time when my business income is at an all time low and all of my employees are laid off?
Yes there is. Many insurance policies are rated on Payroll or Annual Sales; as these will be much lower than usual, call your agent to adjust your Workers Comp Payroll as well as your General Liability. If you have several Automobiles listed on your policy but have cut down your driving; consider garaging those autos and suspending coverage. If your business is completely shut down, you may consider cancelling your insurance completely and then starting it up again when the Lockdowns have been lifted. Insurers are extending cancellation times, helping with payment options and being as lenient as possible.
We are all in this together and are all counting the days until we have this thing under control. And we will. The best thing we can hope for is that we will come out of this more grateful for our jobs, our liberties, our communities and our families.
For more information regarding your policy details, contact Svendsen Insurance or your local agent today.