Simple Answers For Your Small Business About COVID-19
If your small business has been impacted by the global spread of COVID-19 (read: it has), you’ll want to know how your existing insurance policies can help you recoup lost funds and protect you against any claims related to the effects of the virus. This article is designed to help you navigate the most common coverages that you as a small business owner may already have, how they will respond, and how to take action.
What Is Covered by My Insurance Policies?
A general liability policy protects against accidents which cause bodily injury or property damage to a third party. There are a few scenarios in which your general liability policy can come into play due to the effects of COVID-19. You’re a contractor and your crew work on a client’s premises. You’re all seemingly healthy, showing no signs of COVID-19, and it has not been required by the state that you close your business. Your client tests positive for COVID-19 three weeks later and files a claim that you and your team should be held responsible. Here, a general liability policy could cover your impending court fees and maybe even their medical bills if you are determined to be responsible.
Professional Liability Insurance
A professional liability policy is essential when you are looking to complete a risk management package and protects against clients who claim your work was poorly done, late, or never done. This is also known as errors and omissions insurance. With regards to COVID-19, your business might be responsible for ensuring a client’s medical facility is appropriately sanitized. If that facility is closed down because the state finds it does not meet the standards, your client may sue you for their financial losses. The professional liability policy would cover the investigation and defense of this claim against you.
A&H policies cover your medical expenses when you become ill. Should you contract COVID-19 or have any other unrelated symptoms that require medical attention, this is when your A&H policy will come to the rescue.
Event Cancellation Insurance
Event cancellation insurance will reimburse you for non-refundable expenses, like down payments, if an event unexpectedly needs to be canceled or postponed for a reason out of your control. Because of the federal and state-mandated social distancing restrictions and non-essential business closings, there are many instances where an event cancellation policy could come in handy. Let’s say you have planned a wedding at a venue that was required to close; had you purchased an event cancellation policy, you could be reimbursed for deposits you have already paid to vendors like the caterers, photographers, and musicians.
Business Income Insurance (Business Interruption Insurance)
Business income insurance (also known as business interruption insurance) covers a company's loss of income due to a slowdown or temporary suspension of normal operations because of something like a fire, natural disaster, or a neighbor accidentally backing their truck into your space (hey, it happens).
Most Loss of Business Income policies require actual direct physical loss or damage to property before they will pay out for your loss of business income. However, be sure to check your policy because you may have an extension that would cover business income losses for reasons other than direct physical loss or damage. If your business has been required to close or has faced a drastic slowdown, and if there is a clause in your policy that covers shut down of operations by civil authorities for reasons other than direct physical loss or damage, you may be able to recoup those losses.
How Do I File an Insurance Claim?
Each state and insurance carrier has slightly different processes for filing a claim, but if you think that one of your existing policies may cover you for damages caused by the effects of COVID-19, you should do the following:
Reach out immediately. Read your insurance policy so that you know what is and isn’t covered, then call or email your agent or insurer.
Ask questions. Am I covered? How long do I have to file the claim? What information do I need to provide? What is my deductible and will this claim exceed that?
Document, document, document. Provide all documentation related to the incident and fill out claims forms. Your agent may have additional instructions for you depending on your claim.
File your claim. Submit your claim, but don’t sit back and wait for payment. Keep track of your claim and follow up with the adjuster, asking for its status.
Is It Too Late to Purchase Insurance?
The short answer is “no,” but only for future accidents.
We can all relate to regretting not buying insurance before it was too late. You crack your phone screen and suddenly a five dollar monthly payment no longer seems so bad. The rule of thumb for any insurance policy is that it is never too late (and always a good idea) to purchase coverage for future activities. That said, coverage will not apply to things that you have already done, had prior knowledge about, or that have already occurred.
We hope that COVID has not made a negative impact on your business or health, but know that your existing insurance policy may come to the rescue if it has. And, if you don’t have it, now’s a great time to get yourself covered. Check out our friends at Thimble: you can purchase General and Professional Liability policies by the hour for as little as five dollars, so what’s stopping you?
Terri Hitchcock, JD is currently the Chief Insurance Executive at Thimble Insurance, and was previously a Principal and 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 with a B.A. in English and French from the College of the Holy Cross. She received her JD from the University of Maryland School of Law.
