Among all the things that are frustrating about living through the COVID19 pandemic probably the most frustrating is the simple lack of not knowing. We don’t know how to deal with it. We don’t know when we will have a vaccine or if it will work. We don’t know the long-term effects on our economy. And so much more!
As you can imagine, we field many questions from our clients about how possible COVID19 claims might be covered by their nonprofit insurance program. And there haven’t been many clear answers to this issue either. Although the insurance aspect is becoming clearer, we are still waiting for the insurance industry to figure out their response to this unprecedented event.
The simple answer is, except for Workers Compensation, don’t expect any insurance coverage for COVID19 Claims. Below I have offered a bit of analysis for you.
General Liability – 2 Issues
- Specific Exclusions: As a response to the pandemic, many insurance companies have started including a specific exclusion for viruses and virus-related claims to general liability policies. Your policy may or may not have this exclusion but if it does there is no coverage for these claims.
- Difficult Claims to Process: If there is a COVID19 claim against your organization and you don’t have the exclusion, then you may have coverage. However, processing a virus-related claim is difficult because several things need to be true:
- The claimant is obligated to prove that they contracted COVID19 through the activities or services of your organization. It’s quite difficult for anyone to know definitively exactly where and from whom they contract any illness.
- Your organization has to have been Legally Responsible for the transmission of the virus. In other words, if COVID19 was spread because you were negligent in providing proper safeguards then then you would be legally responsible for the related claims. However, if you did everything you could to prevent the spread it would be hard to prove that you were negligent.
Directors & Officers Liability – Beware
- Board Decisions: Your organization and your board members can be help liable for any and all decisions they make. This includes any decisions regarding the handling of COVID19 in relation to your operations, programs, events, employees, volunteers, etc.
- Is There Coverage: Without any specific exclusion there could be coverage through Directors & Officers Liability policy depending on the circumstances. However, since D&O policies are non-standard each insurance company could respond differently. There are many of these claims currently working their way through the system and it remains to be seen how the insurers will cover these claims and if they will start adding virus exclusions to new and renewing D&O policies.
Workers Compensation – What To Do
- Claim Reporting Requirements: If you have an employee that contracts COVID19, although the laws vary from state to state, it is generally assumed that they contracted it during their employ. This is known as “presumptive liability” and you are obligated to make a claim on your Workers Comp policy.
- Do These Claims Count Against You: Most states are not counting any COVID19 against you as an employer. In other words, these claims should not affect your loss ratios or your experience modifications.
- Working at Home: As an aside, if you have employees working at home during the pandemic, we recommend that you consider Cyber Liability coverage. Cyber attacks are on the rise. And, your organization has less control over electronic systems with remote workers which increases cyber-attack risk.
Regardless if there is specific coverage or if there are specific exclusions, we encourage our clients to submit any COVID19 related claims. As mentioned above, the insurance industry is still trying to figure this out along with the rest of us. So, submitting any claim means that there is a chance the claim would be paid. Also, there is a possibility that there might be a federal mandate that these claims get paid at least partially. SteelBridge is here to help if you have any questions on this topic or any other nonprofit insurance related topic.