As businesses assess the impact of COVID-19, they will be examining insurance policies to determine if there is cover for losses. In this article, we describe some broader coverage issues beyond business interruption insurance. As a separate article appearing on our website, we have described the area of business interruption insurance. The two articles can be read in conjunction to give an overview across all main insurance areas.
Businesses should check to see if their trade insurance covers risk associated with bad debts that arise as a result of COVID-19. An insured can only recover under trade insurance where the underlying defaulting party was under a legal obligation to pay. In circumstances where force majeure is successfully used as a defence to payment, the insured may not be covered.
Employer’s Liability Insurance
The number of employees lodging personal injury claims, alleging exposure to COVID-19 due to their employer’s negligence, may increase. This is something that insured parties need to consider. Businesses should review their relevant policies and determine if such risks are insured against. Businesses that are providing essential services, and therefore have not implemented a working from home policy, must take every effort to ensure the safety and welfare of their employees present on business premises for the duration of this pandemic.
Public Liability Insurance
In a similar vein to employer’s liability insurance, businesses need to consider whether their policies adequately protect them against the risk of non-employees alleging exposure to COVID-19. It is foreseeable that most public liability insurance policies will cover such risks. It would be prudent for businesses to review their policies insofar as those policies impose positive obligations on the business. Any failure to adhere to such positive obligations (i.e. social distancing) may necessarily lead to a denial of compensation in the event a claim is made against the policy.
COVID-19 has necessitated the cancellation of events on an unprecedented scale, corresponding in losses for event organisers and business travel disruption for attendees. Such events will often have bespoke insurance policies and organisers are advised to consider the policy wording to determine if the event was properly cancelled in accordance with the terms of the policy.
Cyber Insurance and Data Loss
With huge numbers of employees now working remotely, businesses must be extra vigilant to the risk of cyber-attacks and data loss. Businesses are well advised to revisit with their brokers the level of coverage that they have for these risks and to continue to educate their employees of such risks.
Common Issues for all Insurance Policies
Businesses should check policy limitations generally to determine if the losses suffered will be treated as one loss or several losses for the purposes of the policy. Policies typically include “aggregation” clauses to determine what counts as one loss under a policy. This will have important implications in determining the quantum of any loss that may be recoverable, along with any deductibles applicable to claim(s).
Insurance policies will often have express limitations on the amount recoverable by an insured under the policy and there may also be time limits to be observed before a claim may be initiated.
Businesses should pay careful attention to notification and mitigation of loss clauses in their policies. Compliance with clauses which require positive action from the insured can increase the chance of recovery for the insured, while non-compliance can lead to an exclusion of cover.
How William Fry can help
For more information on the business interruption insurance and the impact of COVID-19 on such policies, please contact a member of our Insurance Team or your usual William Fry contact.
Contributed by Shannon O’Neill