During the height of COVID, our clients had many questions about COVID and insurance. Several months later, many questions about insurance related to COVID still exist.

As the pandemic has progressed through stages, the insurance questions have changed. But there is still uncertainty and confusion about insurance and how it might or might not respond to COVID-related or COVID-caused claims.

Below are a few “talking points" that may be beneficial over the coming months.

Business Income

Does my business income policy pay for my income loss due to COVID-related business closures?

• A key requirement of the business income policy is that there be damage to property caused by a covered cause of loss that results in the business having to close.
  

• Whether “physical damage" is caused by a virus is the key. Physical damage is understood by the courts to mean a physical change that requires repair. Something (a virus) on the surface may require cleaning, but not repair. There are a few existing exclusions in the property policy that support this holding.
  

• Courts are beginning to answer this question. As of this writing (8/14/2020), three courts have said a virus does not cause physical damage:
  
• Gavrilides Management Company vs. Michigan Insurance Company (Michigan)
• Rose's 1, LLC et al v Erie Insurance Exchange (DC)
• Diesel Barber Shop, LLC et al v State Farm Lloyds (Texas)
• Mama Jo's, Inc v Sparta Insurance Company (Florida – August 18, 2020) – wasn't COVID, but involved the need to clean from construction dust and debris.

• One Missouri court has responded slightly differently, but only in regard to a summary judgement request from the insurance carrier. In Studio 17, Inc. et al v The Cincinnati Insurance Co. a Missouri judge denied Cincinnati's request to dismiss. A final finding has not yet been issued.

• If there is no property damage, business income coverage is not triggered, regardless of any other endorsements.
  

• Business income coverage does not appear to be triggered because of the lack of property damage. There is no coverage.
  

• E&O note to agent: Do NOT advise your client against turning in a claim. You can explain the facts of coverage as we understand them, but do NOT make a coverage decision for the carrier. Tell the client you will submit the claim with no promises of coverage. Courts and/or the government may still involve themselves, so turn in the claim if the insured asks! 

My business income policy provides coverage for actions of Civil Authority. Is this coverage triggered because the (town, city, county, state, etc.) ordered me to close my business?

• Coverage for the actions of a civil authority is triggered only when there is property damage in the area. Just like with business income, physical damage means that there is damage to the property requiring repair.
  

• Additionally, civil authority coverage is triggered because the civil authority restricts access to the area because of wide-spread physical damage making the area unsafe. The government didn't restrict access to the area (“essential" businesses were still open), they told which businesses could open and which couldn't. This does not trigger the requirement.
  

• (Refer to the E&O note to agents above. Never advise against turning in a claim.)
  

My business income policy does not have a “pandemic" exclusion, shouldn't I have coverage?

• Although this is talked about on the news, there isn't a “pandemic exclusion" because a “pandemic" does not cause loss. “Pandemic" is only a descriptive term to describe how broadly a virus has spread. A pandemic does not cause a loss, that's why it's not excluded.
  

• There is also talk about the virus exclusion. If the policy does have the virus exclusion, this will exclude coverage. But even if this exclusionary endorsement is not attached, there is still the requirement that physical damage occurs (reference the discussion under the business income question). 

Could I have purchased coverage for this loss?

• Since this pandemic started, the industry has begun talking about the availability of coverage for this type of event. You may have heard on the news that Wimbledon had coverage, the Tokyo Olympics had coverage and even the Final Four had some level of coverage.
  

• Yes, this type of coverage was available, but through specialty markets, mostly for specialty events (like was just discussed) at very high premiums. None of my carriers offered this coverage, and none of the excess and surplus lines markets with which I do business made this coverage known to us.
  

• Although there was some form of coverage out there for this event, it's not likely a coverage we could have found with a reasonable search and at a reasonable price.
  

• Moving forward, there are a few specialty markets developing coverage for this type of event, but from what we have seen so far, the coverage is very narrow, and the limits are relatively low. This is not a coverage our “standard" insurance market wants to write.
  

Workers' Compensation

If my employee contracts COVID, is he/she covered under workers' compensation?

• Traditionally, for an illness to be considered “occupational" and covered by workers' compensation, there had to be something peculiar or unusual about the work that increased the chance that the employee would contract the disease. The historical example is black lung disease in coal miners. 

• Based on past findings, catching the flu or any other virus at work was not compensable unless there was something about the job that increased the likelihood of getting sick. For example, doctors and nurses are exposed to viruses as a normal part of their work, so illness from a virus may have been compensable.
  

• COVID has led some states to pass resolutions stating that if an employee of an “essential" business contracts the virus, there is a rebuttable presumption that it was work related and is thus covered by workers' compensation. These rules vary by state. (The agent needs to review the specific state.)
  

• Historically, no, this would not have been a covered illness under workers' compensation unless there was something unusual about the job; but COVID may be viewed differently going forward. When in doubt, submit the claim.
  

I have employees working from home now, are they covered?

• If an injury arises out of and in the course and scope of employment, it is compensable under workers' compensation provided:
  
• The employee was where the employer expected him/her to be; and
• The employee was furthering the work of the employer at the time of the injury.

• Working at home does not change these requirements, but any injury may require the insurance company to gather more information regarding the facts of the injury. Was the employee moving boxes or playing with the dog?
  

Some of these now home-based employees live in other states, do I need to make any changes to my workers' compensation policy because of this?

• Yes, you may need to specifically name those states as primary, what are referred to as 3.A. states on your workers' compensation policy.
  

• There are two key workers' compensation concepts that apply to employees working in other states, extraterritoriality and reciprocity:
  
• Extraterritoriality means that the workers' compensation policy from the employer's state follows the worker to and provides coverage in other states. Every state allows the workers' compensation policy to follow the worker to other states – but not all states allow the same extraterritorial benefits (agents, you will need to know the state's specifics);
• Reciprocity means the state in which the employee is working “recognizes" or allows the work comp naming the employer's state to provide coverage. Not every state reciprocates or reciprocates in full. If the state does not reciprocate or has reciprocal limitations, that state must be listed (agents must know these state laws as well).

• When employees are working in other states, even temporarily, the states in which they are working may need to be added to the workers' compensation policy.
  

General Liability

If a customer claims to contract COVID in my store/shop/operation, do I have coverage from my general liability policy?

• This is a seemingly simple question, but it is without a simple answer. The answer will depend on the specifics of the commercial general liability policy and the situation.
  

• Several requirements must be met before the CGL responds:
  
• The insured must be legally liable for the injury;
• The injury must be caused by an “occurrence," and
• There aren't any exclusions that apply.

• Whether or not the insured is legally liable is a question for the courts. Essentially, the injured party will have to prove that the insured had a duty to act in a certain way (like a reasonable and prudent person would in the same situation); that they didn't act like a reasonable and prudent person; and that this failure to act caused the injury.
  

• Proving the person got sick at any particular location may be almost impossible. Even if they visited the insured's operations, how can they prove they contracted COVID at the insured's location?  This will likely require the court's involvement.

• If somehow the injured party is able to prove the insured is legally liable, is spreading the disease an occurrence? There are too many variables for a “yes" or “no" answer.   

• IF the insured is held legally liable and IF spreading the virus is an occurrence as defined in the policy, are there any exclusions that might apply? Without a disease-related exclusion, it appears there are no applicable exclusions in the unendorsed CGL. But there is always the possibility the general liability carrier will attempt to apply the policy's “absolute" pollution exclusion found in the unendorsed policy (exclusion f.). A virus might be considered a pollutant; but again, the courts would have to decide.

• If a disease-related or virus-related exclusion is attached, there is no coverage. If the insurance carrier uses Insurance Services Office (ISO) forms, it may have attached the CG 21 32 - Communicable Disease Exclusion. If this is attached, there is no coverage.
  

• Insurance carriers will likely increase the use of the CG 21 32 going forward and likely won't willingly remove it.
   
• Coverage for COVID in the CGL is heavily fact based and cannot be easily determined. If there is the possibility of a claim, submit it to the carrier. 

Should I require customers to wear masks?

• Agents, do not answer this question. This is outside your licensure and likely expertise. This is a question that should be referred to a lawyer.
  

Commercial Property

We made the decision to shut down operations and send people home (The government shut down our operation); we haven't been in operation for _____ months, does this affect our property coverage?

• Commercial property policies generally contain a vacancy provision. This provision can exclude coverage for certain types of losses and/or effect the amount of coverage payable to cover the damage cased by other types of losses. The question becomes, is the property vacant simply because there is no activity?
  

• If coverage is written using Insurance Services Office (ISO) policy language, vacancy is essentially defined to mean that a certain percentage of the building does not contain the necessary equipment to conduct normal operations. This does not mean that the business must be in operation, only that the business has the equipment necessary to operate. So, if it's a manufacturing operation, all the machinery necessary is in place and everything just needs to be turned on to be operational. Under the ISO definition, the building is not vacant when it contains the necessary equipment to operate.

• However, some insurance carriers apply an “activity-based" definition of “vacant." These proprietary coverage forms consider a building vacant if it has not been used to conduct normal operations for a certain period of time. Under these insurance policies, if the business has not be operational for a period of time, even though the necessary equipment is there, the building is considered vacant.
  

• Agents must read the specific form to know which standard is used. Don't answer the question until the form is reviewed.
  

Personal Auto

I have begun driving for (Uber, Lyft, Uber Eats, Door Dash, Grub Hub, etc.), does my personal auto policy provide coverage?

• No, the personal auto policy does not provide coverage for such work. The personal auto policy contains the “public or livery conveyance" exclusion that excludes coverage for any app-based delivery. Although generally phrased as one concept, public conveyance and livery conveyance are actually two different threshold requirements. Let's define both terms to clarify coverage (or the lack thereof).
  
• Public conveyance: Making the vehicle available for public use (like a common carrier);
• Livery conveyance: Carrying persons or property for a fee.

• When the app is turned on, the vehicle has been made available for public use (the driver will pick up and deliver for anyone or any restaurant). Any pay received is specifically for the carrying or persons or property for a fee.
  

• Because of the public or livery conveyance exclusion, there is no coverage when driving for any app-based delivery operation.
  

My son/daughter is delivering pizza for the local pizza place, is that covered under my personal auto policy?

• Yes, it is, depending on the specific policy language. Unlike delivering for an app-based food delivery operation (Uber Eats, Door Dash, Grub Hub, etc.), the insured is not involved in public or livery conveyance when delivering for one restaurant.
• The vehicle is not available for “public" use because it is being used for one restaurant only;
• Courts seem to agree that an employee delivering food for his/her employer is not livery conveyance even if a separate delivery fee is charged. In a livery conveyance, the fee is charged by the carrier as their remuneration for providing the delivery service. In pizza delivery or food delivery, the fee is charged by the restaurant for its own purposes (probably a charge for convenience) and is not necessarily for the benefit of the driver.
• Because the vehicle is not being used as a “public or livery conveyance," coverage depends on the policy language being used.
• Insurance carriers using policy language written by Insurance Services Office (ISO) without any limiting endorsements do provide coverage for this type of delivery.
  
• Proprietary personal auto policies may contain a specific food delivery exclusion.
• It is important to read the personal auto policy to assure there is no food delivery exclusion in the policy or endorsed to the policy.

• Property Damage: Is It "Property Damage" Just Because a Jurisdictional Order Uses the Term "Property Damage"?
• Business Income, COVID-19, and Plaintiff Attorneys: They Keep Trying
• Why "Pan demic" is NOT Excluded in the Business Income Policy
• COVID-19: Extended Business Income Coverage
• How Business Income Responds to COVID-19 in Under 975 Words
• Unwrapping Gregory Packaging: Proving No Business Income Coverage for COVID-19 Closures
• Coronavirus: Does Business Income Respond?
• Coronavirus: Business Income Losses and a Covered Cause of Loss
• ISO's Business Income Response to COVID-19
• Coronavirus 'Civil Authority' Coverage May Hinge on Science

• Does Requiring Customers Wear Masks Have Any Effect on Legal Liability?
• Is the Insurance Policy Affected if the Business Opens Against a Governor's Orders: The Facts About Supposed "Illegal Acts" Exclusions
• COVID-19 and Commercial Property Vacancy Concerns
• Coronavirus and the CGL

• Coronavirus and Work Comp
• Workers' Compensation, COVID-19 and 3.A. States

• Coronavirus and the Auto Exposure
• Does the PAP Cover Food Delivery? 
• COVID-19: Are There Any Weird Homeowners' Coverage Exposures?