Now that the coronavirus has spread to United States residents, employers across the country are on high alert. And rightfully so.
The coronavirus is a family of viruses named for crownlike spikes on their surfaces. Some strains can infect people and animals and cause the common cold and/or more severe diseases, such as SARS and, more recently, COVID-19, the outbreak that began in late 2019 in Wuhan, China.
According to the Centers for Disease Control and Prevention, at print time, COVID-19 had already caused 11 deaths in the U.S.
For all U.S. employers, the issue is no longer if the coronavirus will become a business concern, but, rather, how to prevent it from becoming a bigger one—and which aspects of an organization will be affected most.
Coronavirus & Workers’ Compensation
If an employee tests positive for the coronavirus or causes the virus to spread to others on your staff, your organization will want to file a workers’ compensation claim. Additionally, should an employee unknowingly infect their spouse or children with the coronavirus they contracted on the job, your business can also be held liable.
This time, under Workers’ Compensation Coverage B (providing coverage to the employee, covering medical care and covering lost income and rehabilitation costs for employees who are injured on the job) or the employer’s liability portion of Workers’ Compensation Coverage B (providing coverage to the employer for any work-related bodily injury or disease aside from the liability that is already imposed on the employers by the workers’ compensation law).
Employers will want to file a workers’ compensation claim due to the coronavirus if an employee contracts the disease while on the job, which applies to both hourly and contracted employees.
Of course, if the virus spreads to other employees, the workers’ compensation claim will likely be considered a catastrophic loss or exposure claim, kicking in full policy limits.
Workers’ compensation policies will typically cover lost time, permanent disability, medical expenses and a death benefit in these scenarios.
Coronavirus & Business Interruption
The latest—and for many businesses most significant—fallout from the coronavirus is the business interruption it’s causing. For many businesses, the epidemic has affected supply chains—with many organizations now unable to ship or receive the products necessary to complete their work, among other significant personnel or materials delays.
Unfortunately, business interruption policies don’t typically cover epidemics, but require a trigger, like a degree of damage, to the insured’s property. Some businesses have been able to argue that contaminated items, such as airline tray tables, heating, ventilation and air conditioning systems (HVAC), assembly lines, etc., could trigger property damage or business interruption if the contamination brings the insured’s business to a stop.
Contamination of the coronavirus on a level that renders property uninhabitable or otherwise unfit for use could qualify as property damage. When endorsed onto the policy, contingent business interruption coverage may apply to loss due to the suspension of the insured’s operations caused by direct physical loss of or damage to 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. Rather, the insured would have to show covered property damage at the dependent property location, and contamination may not be enough to satisfy those requirements.
Policy reviews for business interruption or contingent business interruption coverage include provisions relating to mitigation costs or expenses to avoid loss that might be covered under the policy if steps not taken, definition of property damage and exclusions for virus, bacteria and pollution.
It is critical to talk to your insurance broker about your business interruption and contingent business interruption policy coverage to find out what parameters, limits and exclusions are in place and what you should be looking out for ahead of a potential claim.
Before approaching your broker, gather the answers to the following questions:
- Have your suppliers’ premises, workplace, production lines, HVAC or equipment been contaminated?
- Are employees unable to get to work because of illness, quarantine or inability to commute?
- Are your suppliers unable to produce goods due to government order?
- When might your suppliers be back in business?
- Do your suppliers have insurance or other type of assistance for recovery?
What Employers Can Do Right Now
At print time, the coronavirus had infected more than 100,000 people around the world—and counting. While mostly centralized in mainland China, this number includes a rising number of cases in the U.S. and worldwide.
Because there is no way to predict how the coronavirus epidemic might play out in the U.S., now is the time for businesses owners and operators to prepare themselves with the following five critical practices:
- Prioritize regular hygiene—This might sound obvious or self-explanatory, but it’s important to give your employees constant reminders. Hang signs throughout the office and at the jobsite, especially in food service and common areas, reminding employees to wash their hands frequently and cover their faces while sneezing and coughing. Urge your employees who aren’t feeling well to stay home and seek immediate medical attention. When possible, it may be wise to amend your company policies to allow employees to do so without being using vacation time or otherwise be punished for taking the day off.
- Author an emergency preparedness plan—Select a working group of employees from across your organization to create a business continuity, emergency preparedness and even pandemic reaction plan, if you don’t already have one. Consider business interruption issues specific to your construction specialty and locale, and establish procedures that can be enacted on a moment’s notice.
- Take precaution with sick employees—Employees who may have been exposed to the virus should be sent straight to a doctor to be tested, even before returning home or going to the jobsite. Require clearance for any exposed employees before returning to the office. Additionally, require any of your employees waiting on test results to remain at home until a negative result is official. If or when the employee is cleared, let the entire staff know they have been tested, and the result was negative.
- Report claims immediately—Time is of the essence. Exposure and potential claims need to be submitted as early as possible. This will allow for a thorough and efficient review of the case and coverage scenarios.
- Review policies—Work with your broker to compile an analysis of current policies, both primary and excess, to reveal whether an event like this is covered by the insuring agreement and whether any 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 of specific policies.
Unfortunately, the coronavirus has reached the U.S., and has the potential to affect every business, regardless of whether its employees travel overseas. Now is the time to get ahead of any potential liabilities and do everything you can to plan for unexpected interruptions or employee quarantine issues.