Our world continues to be chaotic. With chaos comes a lot of uncertainty. Uncertainty can spell disaster for any business. One of the main objectives for any decision-maker or business owner is to reduce uncertainty and risk. Insurance is one of the ways to reduce or transfer business risk. However, something needs to be said. Insurance policies/coverages can provide another source of UNCERTAINTY. This uncertainty arises from not conducting an insurance coverage audit with a trusted insurance advisor. No one wants to spend too much time fixated on their insurance. However, not understanding your insurance coverages carries its own risks.  

Here are a few pressing insurance coverage matters that I wanted to share with you. Most of the talk around COVID and insurance has revolved around Business Income/Interruption claims on the property insurance side of the house. However, there are potential liabilities via other coverage lines such as Commercial General Liability and Directors and Officers insurance that you may be less aware of.

Liability Concerns

COVID-19 raises a number of liability concerns, particularly if guests, customers or employees allege they became sick due to a business’s negligence. When it comes to these concerns, it’s important to take the following insurance considerations into account:

• General liability insurance—General liability insurance, sometimes referred to as commercial liability insurance, protects your business from financial loss should you be liable for property damage or personal and advertising injury caused by your services, business operations or employees. It can protect you from costs associated with bodily injuries, damage to third-party property, personal injuries, medical expenses, litigation and more. When it comes to COVID-19, general liability policies should provide coverage and allow you to defend claims. It should be noted that, in order for a claim to be valid, the claimant would have to allege the virus was contracted due to the insured’s negligence and detail how, when and where they got sick—all of which could be difficult to pin down.
• Directors and officers (D&O) insurance—Shareholders and other stakeholders could sue a business should they fail to respond appropriately to COVID-19 concerns. Specifically, stakeholders may contend that management failed to develop adequate contingency plans or detail how COVID-19 could impact the company's financial performance. It should be noted that most D&O policies exclude coverage for bodily injuries, but may offer some protection depending on the specific allegations. As such, it’s important for businesses to review the scope of their D&O policies to confirm they are covered in the event of an incident.

Preparing for a Claim

While COVID-19 introduces a level of uncertainty when it comes to available insurance protection, there are a number of precautions organizations can take to prepare for a claim. To control potential losses, policyholders should:

• Audit existing insurance policies and their provisions to identify potential gaps in coverage.
• Review and modify existing contingency plans, estimating the potential impact of a long-term closure.
• Identify equipment, services, and third parties critical for continued operation.
• Have a process in place for responding to a loss, which could include: 
  • Detailing how the loss occurred and the impact the loss had on your operations
  • Tracking all losses and expenses associated with the claim
  • Highlighting how the claim could impact third parties, like suppliers and consumers

For additional protection, it’s important for businesses to seek the help of a qualified insurance professional.