COVID-19 Insurance Issues and Concerns

By Remmie Butchko, CIC

Georgetown Insurance Service

Silver Spring, MD


COVID-19 has shut down many businesses either due to state mandated stay-at-home orders or infections in the office or place of work, such as construction sites.  While business owners are trying to make ends meet with reduced revenue, complete closures, COVID-19 affected employees and cancelled business travel, they immediately first look to see if their insurance will cover them.

Here’s a Q&A that you may find useful:

Q: Will Business Interruption insurance pay for shutdowns caused by COVID-19?

A:  Probably not as the policy is written; due to the fact there has been no direct physical loss to the business, claims are not being approved.  However, there are proposals that began initially at state-level (NJ lead the charge, now several others have followed suit), and now has reached national level with the recent introduction of the Pandemic Risk Insurance Act.

Q:  If employees contract COVID-19, is it covered by Workers Compensation?

A:  Workers Compensation claims are fact-dependent and state-dependent. Generally, to be compensable under a Workers Compensation policy, an illness or disease must be “occupational” and arise from or be caused by conditions in the course and scope of employment. Ordinary diseases of life, such as the common cold and the flu, typically are not considered occupational and are not ordinarily compensable under Workers Compensation policies. Accordingly, we expect that most COVID-19-related claims will not be considered compensable under Workers Compensation laws, but it is ultimately up to each individual state to make these determinations.

In limited special cases where the course and scope of work expose the worker to these illnesses, such as medical professionals and first responders, it is likely that the claim would be considered a compensable claim. The employee, however, still must prove that the illness arose out of the scope of their employment and was caused by the conditions particular to their work. Claims of this type require careful review of the specific facts and state law and regulation.

Q: Does travel insurance pay for cancelled flights, lodging, or other costs associated with cancelled vacation plans?

A:  Possibly, but most likely not.  Most travel insurance policies have an epidemic and/or pandemic exclusion, which is problematic for making a claim on the policy.  Also, the reason for the cancellation is pertinent.  If the trip was cancelled because the choice not to travel was made due to fears and concerns, then there will not be insurance coverage.

We are highly recommending to small businesses that they keep detailed records of:

  • Lost income due to mandatory shutdowns.
  • Ongoing business expenses like payroll, rent, insurance premiums, utilities, CAM fees, etc.
  • Details of any extra expenses incurred due to COVID-19 restrictions or prevention. Money that wouldn’t have been spent, otherwise, such as:
    • Supplies (cleaning supplies, cleaning fees, masks, etc.)
    • Setting up remote workers (hardware, software, training costs, connectivity, etc.)
    • Transportation costs
    • Emergency temporary labor costs (overtime, TPA’s for call handling, etc.)

While Business Interruption insurance losses are still somewhat TBD, this information may be needed for other recourse, such as government relief.  Those who are best organized and documented will get to the “front of the line”, and those who have to backtrack to re-create these records could be at a disadvantage.

We will get through this together. Be proactive, safe and stay healthy!

Have questions about your personal or commercial insurance? Contact us to speak with a licensed insurance professional.

Disclaimer: All data, information, and opinions provided on this article, newsletter, or blog is for informational and educational purposes only. While every caution has been taken to provide readers with the most accurate information and honest analysis, please use individual discretion before making any decisions based on the information in this article, newsletter, or blog. Georgetown Insurance Service, Inc. is not responsible if its readers happen to experience loss, injury, or damage resulting from its display or use. All information is provided on an as-is basis. This article, newsletter, or blog does not represent the thoughts, intentions, plans, or strategies of any specific Insurance Carrier, Georgetown Insurance Service, Inc. partner or affiliate.
Have questions? Contact Us to speak with a licensed insurance professional.

Leave a Reply

Your email address will not be published. Required fields are marked *