C&W Insurance continues to assess and respond to the impact of COVID-19 in our community and upon our policyholders. We have taken the necessary steps to manage our own business continuity and emergency preparedness and promise to remain a trusted partner you can count on to help you navigate through this difficult time. In addition to answering your coverage questions, we are here to help provide information on claim prevention.

Although many insurance coverage forms do not support claims arising from the current COVID-19 situation, many companies have advised us they will consider certain underwriting exceptions to accommodate policyholders during this time. In addition, several companies have temporarily suspended the cancellation of policies due to non-payment of premium. Whether you need an advocate to guide you through an existing potential claim, need to review coverage options to protect you from future claims, or need to know your insurance company’s stance on premium payment if you are unable to make payment on time, we are here and ready to help.

Below is coverage and industry information regarding several of the most common issues surrounding economic loss caused by business operation alteration and closure.

Business Interruption Coverage

Business Interruption Coverage (i.e. Business Income) provides reimbursement for loss of income when operations are suspended due to direct physical loss or damage to covered property. The loss or damage must be caused by or result from a Covered Cause of Loss. Viruses or Bacteria are excluded causes of loss by most insurance companies and therefore the vast majority of business income claims stemming from COVID-19 will be denied. Furthermore, Virus is also defined as a “pollutant” which is also an exclusion in the majority of coverage forms.

Due to the overwhelming number of Business Income claims that are expected to be denied on the basis described above, a few states have introduced legislation that mandates insurance companies pay for income related losses due to the closing of an insured’s business. Whether or not this legislation will pass and lead to similar legislation being enacted in Kansas is unknown.

C&W Insurance is also monitoring the lawsuits brought against insurance companies that challenge whether a contaminated surface constitutes “direct physical damage”. The outcome of these suits may impact how other companies resolve similar claims.

Contingent Business Interruption

Contingent Business Interruption Coverage (i.e. Business Income) provides reimbursement for loss of income when a company’s supplier unexpectedly ceases operations due to direct physical loss or damage to covered property. 

Because the loss or damage must be caused by or result from a Covered Cause of Loss which does not include “Virus and Bacteria”, the vast majority of contingent business income claims stemming from COVID-19 will be denied. 

Hired and Non-Owned Auto

Provides liability coverage for bodily injury or property damage that you or your employees cause while driving in the course of work. This coverage applies to vehicles you “hire” (i.e. rental car) or vehicles your business does not own (i.e. vehicle owned by employee). Protection is provided for the named insured listed on the policy and NOT the individual driving the vehicle. 

There are many policyholders under unprecedented financial pressure and seeking optional revenue streams at this time. Some are considering or have implemented delivery service. Whether you are a business adding delivery service or an individual considering using your personal vehicle to make deliveries for a fee, you should contact your agent or representative to make sure your insurance policy will provide adequate protection in the event you are involved in an accident. 

Civil Authority

Provides coverage for the loss of business income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access to your business due to Direct Physical Damage to property caused by or resulting from a Covered Cause of Loss. 

Because the shutdown of a business due to COVID-19 will most likely not meet the requirements of “direct physical damage” or a “covered cause of loss”, it is unlikely Civil Authority coverage forms will respond and provide coverage for this type of loss. 

Employment Practices Liability (EPLI)

Provides coverage for wrongful acts arising from the employment process. The most frequent types of claims covered under such policies include: wrongful termination, discrimination, sexual harassment, and retaliation.

Because many business owners are faced with needing to terminate employees and/or allow employees to work from home, there is an elevated risk of business owners facing employment practice liability claims stemming from these decisions. EPLI is an important coverage every business owner with employees should have as part of their risk management strategy. The need for this coverage has been further elevated as companies manage the disruption to workflows and operations due to COVID-19.

Thank you for trusting us with your business. Please contact us with any questions.