Broker Check

COVID-19 Insurance Issues

April 06, 2020

While business interruption claims and attempts to legislate coverage have been getting most of the attention, COVID-19 also impacts other coverages. International broker Marsh reported on evolving implications last month; their assessment as of March 25 (with input from ARC Excess & Surplus and other sources) summarized by type of insurance is:

Property and Business Interruption

Traditional policies do not provide coverage, but organizations should review their policies and document claims if they believe exclusions do not apply.(According to a LinkedIn post, in May 2018 Marsh and Munich Re collaborated in developing paramedic Business Interruption insurance for pandemics; there were no takers then.)

Workers Compensation and Employers Liability

Employees who can prove they contracted COVID-19 on the job would be covered, but proof may be difficult. Healthcare workers and first responders will have a higher likelihood of exposure, but infection outside the job cannot be ruled out and coverage may be decided on a case by case basis (unless legislation mandates a presumption of workplace exposure). Employees working from home could file claims if their work areas are not set up properly. Other workplace injuries may cost more or take longer to resolve because of COVID-19  impacts on health services. Telemedicine is a partial solution.

General Liability

Some policies exclude communicable disease or define virus as a "pollutant". If possible, these exclusions should be removed.

Pollution Liability

Depending on how a "pollution condition" is defined, some policies may cover COVID-19 claims at least for decontamination

Directors and Officers Liability

Securities class actions have already been filed and with the fall in the stock market more can be expected. Possible allegations are deficient exposure disclosures, misstatements, or failure to act. Failure to have an adequate supply chain could also be an issue. If companies go bankrupt, shareholders may allege mismanagement.

Directors and officers policies typically exclude bodily injury, but some exclusions are broader than others. In general, exclusions beginning with "for" are preferable to those beginning "arising out of"; the latter should be avoided where possible. Any renewal exclusions "arising out of COVID-19" should be deleted or narrowed.

if a policy has a "crisis fund" it can help manage public relations, if the definition of "crisis" covers this epidemic.

As policies renew, in addition to new exclusions underwriters will want to know about COVID-19's impact and effect on future plans.   

Employment Practices Liability

Employers need to protect workers' health and safety while avoiding discrimination against disabled employees or those showing symptoms of the virus. They must also guard against racial discrimination against Asian-Americans. Violations of privacy including revealing personal medical information must be avoided. Working from home can give rise to wage and hour issues. In addition to previous federal, state and local labor laws, the Families First Coronavirus Response Act and new laws at the state and local level will require compliance; failure to do so will lead to employee lawsuits.

When reviewing policies, employers should not neglect notices describing resources available to them. This includes access to employment law firms such as Jackson Lewis and The Equal Employment Opportunity Commission


The increase in cyber crime has been reported on widely. Employees working at home may not have full security in place, or may ignore their training and click on malicious websites. Increased demand may lead to system breakdown. Cyber policies are complex and must be read carefully to know what is covered. Most policies come with notices of free resources for insureds; use them.

Fiduciary Liability

The fall in the stock market and business closures will affect pension plan values. Fiduciaries may face claims that plans were improperly funded, medical plans were improperly selected or COBRA explanations were not given to laid off employees losing health coverage.

Professional/Errors and Omissions Liability

Businesses may be sued if failure to performed is due to not having adequate contingency plans. Professionals could be sued for failing to advise their clients, or giving improper advice. Healthcare agencies may face claims for inadequate care or failure to have their clients tested for COVID-19

As the epidemic spreads, these issues and possible solutions will continue to evolve. Beacon has links to coronavirus resources on its website. Consult your account manager for questions about your coverage Or schedule a call with our Insurance expert Steven Sharkey today.