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COVID-19 and Commercial Insurance

Businesses large and small are struggling with the restrictions and interruptions of the COVI-19 Virus. Our clients are facing issues ranging from Government Closures, to voluntary Closures and even new business models for delivering their product to consumers and other businesses. In this blog we want to address three significant issues we are talking about with clients and some thoughts around them – Business Interruption, Workers Compensation and General Liability.

Business Interruption:

An overwhelming majority of insurance policies have a Virus and Bacteria exclusion. Also, in order to trigger Business Interruption Coverage there has to be “direct physical loss or damage” as a result of a covered cause of loss – for example a Fire. According to a traditional interpretation of policy language that eliminates Business Interruption Coverage as a result of COVID-19. For more in depth interpretation of policy language see this link provided by the Big I (

This event is blazing new trails and the insurance industry as a whole did not foresee a catastrophe of this magnitude. There is legislation in some states where if passed, would require insurance companies to pay business interruption claims due to COVID-19. The NJ Legislature is currently considering such a bill. (Link to NJ Bill A-3844

This particular Bill would apply to businesses in NJ with less than 100 employees that have business interruption coverage on their policies, regardless of existing policy exclusions. We are monitoring this Bill closely and will notify clients if it should pass. We also wouldn’t be surprised if Federal Legislation is introduced shortly on this matter. We have also received several coverage interpretations from law firms that feel case law could support the payment of claims due to COVID-19. This could result in long and drawn out litigation in the courts that will take years to resolve, when businesses need relief now. Hopefully, it won’t come to that.

For now, our advice to clients is if you incurred an economic loss due to COVID-19 then plan to report a claim to your carrier so the incident is documented. Business Income claims, even under traditional circumstances, do not get settled quickly so please understand that nothing is likely to happen quickly in this environment. Gather your data, document your economic losses and if you need help with reporting a claim please contact your representative or our Claims Advocate.

Workers Compensation:

Issues for your Employees can range from making sure your Work Comp insurance extends to their “Work at Home” environment to if a Worker infected by COVID-19 can be covered by your Work Comp insurance. This article ( from the Big I covers many of the COVID-19 specific questions. Here’s a quick excerpt:

Judged against the qualifying factors presented, does any disease or virus declared a pandemic create a true workers’ compensation exposures? Does the Coronavirus crate a workers’ compensation exposure? The short answer is, not likely.” Other than the fact that the Coronavirus is currently garnering intense attention, in most cases it is no more occupational than the flu.

Unless! Only if it is proven that the employee has an increased risk of contracting the virus due to the peculiarity of his or her job might the Coronavirus be considered occupational and thus compensable. Remember, compensability as an occupational illness requires something about the job that increases the risk of exposure and illness. As intimated earlier, healthcare workers may be able to prove the necessary peculiarity being face-to-face with sick people ALL day to assert a compensable injury.

General Liability:

The issue here to be concerned about is if your business operations are fundamentally changing as a result of restrictions from the Virus. The classic example is the Restaurant that is Delivering for the first time and using their own workers in personal cars. If they didn’t have that exposure prior and now the Virus is forcing them to change their operation its time to call your Insurance provider and make sure your Liability insurance will respond. Each business is different, if you are unsure please reach out to one of our team members to discuss your particular circumstances.

This is a bad time to assume everything is OK. If you are unsure please give one of our professionals a call to discuss your particular circumstances. We cannot address hypotheticals but we can provide our assistance to get the most out of your insurance protection.