Insurance Market Update on COVID-19
Many clients are now asking how their insurance policy may respond to COVID-19, known more commonly as the coronavirus, as it continues to result in substantive disruptions to their businesses and daily lives. Officially acknowledged as a pandemic and affecting increasing numbers of people this situation is fluid and changing it seems every day.
The most common question relates to Business Interruption. As we see many businesses close or in the case locally for example with restaurants being forced to close, Business Interruption coverage is top of mind.
In a general sense Ebola, Zika, SARS, and others over the last number of years saw many insurers seek to limit or exclude coverage for pandemic. Unless there is a physical event like a fire, we do not expect many policy(s) to respond.
The vast majority of companies are not suspending operations as a result of physical damage but as a result of social distancing to prevent the spread of COVID-19.
The question that may be tested in the courts is if the Coronavirus is property damage or if the presence of Coronavirus is. Viruses, pandemics and infectious diseases are not typically defined as perils on standard Canadian forms. There may be certain manuscripted policy forms or some carriers may afford certain coverage. Please consult your own policy(s) for details of coverage and specific terms and conditions that may apply to you. The insurer(s) will ultimately make coverage determinations not the broker.
Despite the intent of insurance not to cover COVID-19, we are monitoring the same and insurer(s) may consider certain coverage grants if pressure mounts … we saw that with the flooding
catastrophe in Alberta a number of years ago.
Federal programs are also being created and hopefully will provide some much-needed relief. Please refer to the Government of Canada COVID-19 Economic Response Plan and continue to monitor the same for updates.
Government of Canada COVID-19 Economic Response Plan
Another area of concern is Commercial General Liability (CGL) and Directors and Officers (D&O).
Third-party claims are conceivable against policyholders for failure to warn or mitigate the risk of contamination. Likely the same virus, pandemic, and infectious disease exclusions will apply and in the case of D&O, there would be a bodily injury exclusion. There is an obligation to provide a safe workplace so Employment Practices claims could also result. It is very important to ensure full compliance with the Employment Standards Act in each jurisdiction you operate. Please refer to the following link for British Columbia:
Clients are also reporting an increasing number of emails or phishing scams related to the pandemic. Please be extremely careful and aware that criminals are taking advantage of general public fear.
We understand the devasting effect this crisis is having on our community and it remains to be seen how long it will last and what the potential damage to our economy looks like. In the meantime, be safe, stay home as much as possible and get some rest if you can. There remains much work to do to rebuild and reshape our industries and economies very soon. We will continue to advocate strongly on behalf of all of our clients.
Please contact your insurance advisor to discuss your insurance coverage and minimize the potential negative impact of COVID-19 on your business.
In the event of a question or disagreement with your insurer concerning the interpretation of the policy’s reporting requirements as applied to the reporting of a specific claim, loss, occurrence, incident, offense, or lawsuit, the actual policy wording, which is the contract between you and the insurer, and not JT’s explanation of that language, will be controlling. J.T Insurance Services (Canada), Inc., as an insurance representative, does not provide legal advice, and this explanation should not be relied upon as a legal interpretation of the policy provisions.
How J.T. Insurance Services Supports you in this Changing Market
We work for you, our client, and not the insurance company. Using our knowledge and leveraging our long-term relationships we will advocate on your behalf. We will not compromise your coverage and ensure the very best constructed insurance program with the most competitive rating. This includes casting the net as far as possible to leave no stone unturned.
By canvassing as many insurers as we can to secure the best placement, we will continue working diligently on behalf of our clients to mitigate risk as well as the impact of the current market conditions, securing the most favorable outcome in terms of coverage and pricing.
We are starting your renewal process earlier to ensure we create competition on your behalf.
Our team is more than willing to discuss to review market conditions, update policy information and address any questions.
What can you do if coverage is made available by insurers or government agency?
- Document, Document, Document. Make sure to keep good records of your costs incurred and any additional costs to continue in business.
Additional Information
For more information regarding this topic, please contact your JT Adviser, or visit us at www.jtinsurance.com This material is for informational purposes and is not intended to be exhaustive nor should any discussions or opinions be construed as legal advice. Contact your broker for insurance advice, tax professional for tax advice, or legal counsel for legal advice regarding your particular situation. JT does not accept any responsibility for the content of the information provided or for consequences of any actions taken on the basis of the information provided.
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