A guide to business insurance and Coronavirus (COVID-19)

As a small business owner, it's important to know how your business insurance can respond to the effects that COVID-19 has had on your business.

This post is written by Terri Hitchcock, JD.

CIO, Thimble

Terri is Thimble’s Chief Insurance Officer and our in-house expert on the insurance industry. Previously, Terri was Principal & Director of the Product Design Practice area with Perr & Knight, a major insurance consulting services firm. Her areas of expertise are reinsurance and insurance operations, contracts, compliance, product development, and underwriting, having provided such services to clients in the industry over the past 30 years. Terri graduated, cum laude, with a B.A in English and in French from the College of the Holy Cross. She received her J.D, cum laude, University of Maryland School of Law.

If you’re like me, you’ve been glued to the news regarding Coronavirus, read every article about social distancing and stay-at-home lockdowns, and are eagerly awaiting your online grocer of choice to come back online. You may have also received some helpful information regarding assistance on home schooling, financial bridging and health care protocols, but, what you may not have seen is how your business insurance might respond, or not respond, to the effects that Coronavirus has had on your business and your customers.

At Thimble our business insurance policies can include general or professional liability insurance—so let’s start there.

Your general liability or professional liability insurance policy will defend you if you are accused of being responsible for a third party contracting COVID-19. It may protect you in the event that you are determined to be responsible for that person actually contracting the virus. You should note that merely being contagious, especially if you are unaware of being contagious, may not be determined responsible.

Is my business liable or not?

  • A caterer uses dishes or silverware that he or she washed by hand because their dishwasher was broken, knowing that the water temperature could not be high enough to destroy the virus. – Potentially liable
  • A contractor and his crew work on a client’s premises, all seemingly healthy, showing no signs of COVID-19. Client tests positive for COVID-19 three weeks later. Client suspects he was infected by the crew. – Probably not liable, but the existing policy will defend the claim.

These policies, however, do not respond to YOUR injuries, illnesses or loss of business.

While Thimble does not offer the following policies, we wanted to share guidance on a few popular types of business insurance and how they too may or may not respond to the impact of Coronavirus on your business.

An Accident & Health policy, an Event Cancellation policy or a Business Income policy could each respond to some of the financial losses many of our insureds are facing today. Currently, Thimble does not offer these products, but you may have access to them through another broker. Here are some of the types of losses you might see under those coverages.

  • Accident & Health (“A&H”) – A&H policies cover your medical expenses when you become ill. Enough said.
  • Event Cancellation – In the case that an event you are hosting has been cancelled and you have purchased coverage for event cancellation, you are reimbursed for your non-refundable expenses you have put out for the event, unless the cause of cancellation is otherwise excluded from your policy.
  • Business Income (Business Interruption Insurance) – Most Loss of Business Income and Extra Expense policies require actual direct physical loss or damage to property before they will pay out for your loss of business income. But, you should check your policy. Perhaps you have an extension which would cover business income losses for reasons other than direct physical loss or damage. Look to see if there is a clause that covers shut down of operations by civil authorities for any reason. If so and it does not exclude loss as a result of communicable disease, you may have an opportunity to pursue coverage. Learn more about Business Interruption Insurance for contractors from our friends at Levelset.

We know this is a confusing time for all of us. Understanding the intricacies of insurance is daunting in the best of times. We wish you the best and our support is online to answer any questions you might have.

Stay healthy.

Terri

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