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Insurance Coverage During the Coronavirus (COVID-19) Pandemic

Insurance Coverage During the Coronavirus (COVID-19) Pandemic

Throughout the last couple of months, the world has had its focus on the flu-like virus known as Coronavirus (COVID-19) which began in China. Since January, the virus has spread like wildfire, and countries in every part of the world are working around the clock to stem this spread.

In the United States, we began to see the effects of the Coronavirus in early March. At this time, many states have declared a state of emergency, as has the country itself, and most states have closed down schools and all non-essential businesses in an effort to reduce the number of new cases of the virus. The less exposure people have to one another, the lower the risk of contracting and/or spreading the virus to those most susceptible. We all need to work together to slow the spread and protect each other.

Because there are many businesses which are considered non-essential and employees are not able to complete their work from home, this can severely negatively impact the financial security of these companies. As any good business owner will know, it is important to have insurance for your company to cover your products, services, building, and employees in the event of a disaster so that the business does not have to declare bankruptcy. However, there have been many questions concerning COVID-19 and how the virus will affect businesses in relation to their insurance coverage.

How Will the Coronavirus Affect My Business?

With the exception of certain businesses such as grocery stores and pharmacies, the majority of companies have either voluntarily or been forced to shut down temporarily in the wake of the spread of the Coronavirus. Some companies such as fast food restaurants are still able to operate in an adjusted manner by only allowing drive-thru or delivery service, but this will still limit sales.

It is in the best interests of employees, managers, and customers to avoid being in places where a group of people larger than 10 might gather. We are all doing our best to stop the spread of the virus and keep everyone, including ourselves, healthy.

Unfortunately, this means that those businesses are unable to sell their goods and services which equates to lost revenue. Because this temporary closure may last for several weeks, many businesses are considering how they will be able to stay afloat without daily expected income.

Business insurance is designed to help business owners keep their company from succumbing to the ill effects of circumstances beyond their control such as natural disasters and theft. Many business owners, however, are unsure if their insurance coverage is applicable to COVID-19 or if they will have to face the brunt of economic issues because of Coronavirus closures alone.

Will Insurance Cover My Losses Due to the Coronavirus?

The Coronavirus pandemic and its effects on the every aspect of life in the United States is mostly unprecedented in our modern times. Businesses are being forced to close, halt operations, or disrupt their normal routines, and this will inevitably have negative effects on their revenue. Disruptions to normal operations, supply chains, production, and revenue would seem to be covered by insurance coverage known as "disruption insurance," but there have been questions concerning whether or not this type of insurance truly covers the type of disruption to business that Coronavirus creates.

Business disruption insurance is one which most businesses generally carry within their business insurance policy. Typically, it is not a stand alone policy but part of comprehensive or property/casualty insurance. It is designed to cover a business in the event of a natural disaster or fire. Unfortunately, some of these policies are very specific with the types of disruptions they cover and may not actually include (or may even have written exclusions for) communicable diseases.

After the SARS outbreak of 2003, some insurers made adjustments to their policies concerning compensation for communicable disease outbreaks. There are now "trigger dates" which help insurers figure out when they are liable to pay for compensation based on the official reporting date of the CDC for a communicable disease. However, most insurance policies completely exclude communicable disease outbreaks, and only policies which had been previously negotiated to include something like the Coronavirus outbreak will actually have coverage.

However, even companies which have disruption coverage and communicable diseases are included may still not be able to collect for the disruption. Many insurers require quantifiable evidence of physical losses in order to pay for business disruptions. Without damage to property or inventory, it would be extremely difficult to quantify a business' losses because of the Coronavirus. There would need to be pre-negotiated terms which cover customer or supply chain losses, but, in general, these are cost-prohibitive to most businesses, so it is unlikely that the vast majority carry these terms in their policies.

How Can I Protect My Business During the Pandemic?

Obviously, it is too late to purchase insurance coverage that would actually provide your business with the payments it would need to recoup losses sustained from the current Coronavirus outbreak. However, there are steps you can take to help you business stay afloat during these difficult and uncertain economic times. Federal, state, and local governments around the country have been working to make sure that companies like yours are able to sustain themselves during the outbreak and closures, so there are resources available to you that you should definitely take advantage of as soon as possible.

First, review your current business insurance policy to find out exactly what kind of coverage you have and what you may be eligible to collect. Because your company has likely closed its doors due to the federal and state mandates, you probably have a good deal of time on your hands. Use it to carefully read and dissect your insurance policy for anything that may be helpful. Also, be sure to document any and every Coronavirus-related impact on your business. Be thorough and specific! Keep track of your expenses related to the deep cleaning and sanitizing efforts you are likely doing in the interim of reopening your doors, losses to revenue, disruptions to the supply chain and production, and anything else that may have changed from your daily routine cause by the virus outbreak.

Second, research and apply for the new small business loans which the federal government has made available to help companies like yours weather the Coronavirus storm. The SBA has announced that it would provide for up to $2 million disaster assistance loans which are low-interest (3.75% for small businesses and 2.75% for nonprofits). They are available to businesses that have sustained "substantial economic injury" because of the Coronavirus. Stay updated with your state government to make sure you know when your state has been approved for disaster relief assistance funds. You can also find out what your state or local chambers of commerce are doing to help small businesses who are struggling because of the outbreak.

Third, use the resources that are available to you. Banks and credit card companies are doing what they can to give assistance to small business including waiving monthly service fees as well as fees on early CD withdrawals. Some like Wells Fargo are also donating money to help in the public relief effort. The federal government has also extended tax payment deadlines to July 15 so that taxes are not an immediate concern for struggling small business owners.

Finally, use this as a learning opportunity. Once we have overcome the Coronavirus and business is beginning to return to normal, think about how you can change your insurance policy or any other contingencies you may want to include in future policies. If your current policy does not have coverage for this type of disruption, you may want to consider changing companies or investing in increased coverage.

Contact Our Dallas, TX, Business Insurance Experts

At the Thumann Insurance Agency, we have been providing Dallas-Fort Worth businesses like yours with the best possible coverage for over 22 years. We are a family-owned Independent Insurance Broker, and we represent 80 of the nation's leading insurance carriers. We know that we can find a business like yours the right insurance at the right price to meet your needs.

Because we are an independent broker, we work directly for you and keep your business' best interests in mind when finding you the insurance coverage that best suits your company. You are our priority, not the insurance companies. We understand how important it is that you are able to keep your business afloat during these trying times caused by the Coronavirus, so we want to help in any way we can.

Contact us today to learn more about the insurance coverage we have seen and details concerning what may or may not be covered by your policy. We specialize in small to medium-sized businesses and want to work together so that our country's economy stays strong and healthy even during this unprecedented time of business disruption.