Syracuse, NY

 

100 S Salina St.

Suite 370

Syracuse, NY 13202

 

Phone: 315-234-7500

Fax: 315-234-7508

Toll Free: 888-400-8087

Rochester, NY - DHH Office

 

95 Allens Creek Rd.

Building 2, Suite 5

Rochester, NY 14618

 

VP: 585-286-3442

V: 866-371-8830

 

© 2019 by CH Insurance. All rights reserved.

Rome, NY

200 E. Garden St.

Rome, NY 13440

Phone: 315-336-0880

Fax: 315-336-5732

The Coronavirus situation is on everyone’s mind. We are receiving calls asking “how will my policy

respond?” We know many more of you have similar questions. Here is a brief primer on how insurance

will likely respond and what your organization can do to prepare.

The two policies under primary consideration regarding a Coronavirus outbreak are Business 
Interruption insurance and General Liability insurance. Business Interruption insurance pays if 
your business is shuttered or reduced due to a Covered Cause of Loss and the organization cannot 
continue to generate the same level of revenue. General Liability insurance pays if there is an 
allegation of bodily injury, such as someone getting sick due to your negligence.

Business Income (BI) coverage is only triggered when there is “direct physical loss” to your 
property. Since Coronavirus does not cause physical damage to tangible property, it is unlikely a 
standard BI policy would respond. Even if it did, many policies carry an exclusion for property 
damage caused by “Virus or Disease.” However, there is an additional BI coverage – the Civil 
Authority additional coverage

– that offers an extension of coverage. Civil Authority coverage applies when the physical area 
around your place of business is closed-off by a governmental authority due to damage in the area 
by a Covered Cause of Loss. This action must be due to “dangerous physical conditions resulting 
from the damage.” For example, a client collected on a claim when their campground was ordered to 
be closed for several weeks due to nearby wildfires. Since fire is a Covered Cause of Loss, the 
claim was paid – even though there was no fire damage to the buildings.

This brings us to the central question. Is Coronavirus a “Covered Cause of Loss”? If you purchased 
the highest-quality form of coverage, there may not be a specific exclusion for a disease like the 
Coronavirus, meaning there is the potential for coverage. However, an insurance company would argue 
that there were no “dangerous physical conditions” resulting from a potential Coronavirus epidemic. 
A quarantine is designed specifically to prevent a dangerous condition. An empty Main Street due to 
either mandated quarantine or general fear of virus is not by itself a dangerous physical 
condition. We do not anticipate in the near future that you would even have the option for 
Coronavirus insurance coverage. There is enough data on the frequency and severity of fire, 
tornado, and flood losses to develop a fair rate. There is no data about the frequency and severity 
of Coronavirus losses, so there is no way to accurately price coverage.

What about a General Liability claim, due to Coronavirus? For example, an organization had 
negligence at its facility, causing the incubation or spread of the Coronavirus. Those affected 
would undoubtedly

claim, probably in court, that they experienced “bodily injury” from the negligence of the 
organization. This allegation would cause the General Liability policy to respond, provided 
Coronavirus was not an excluded Cause of Loss. While Coronavirus is too new to be excluded by name 
in most policies, there is also no other exclusion on an unendorsed General Liability policy that 
would distinctly remove coverage. Some policies carry a “Communicable Disease Exclusion,” which 
would certainly alter this

position.


In summary, if your organization’s revenue suffers because of Coronavirus fears or reality, there 
is likely no insurance coverage. If your organization directly causes others to contract the 
Coronavirus, there is may be coverage for harm caused to others.

As professional risk managers, we see the most significant risk of Coronavirus coming from the 
ensuing fear, rather than the disease itself. If a case is confirmed in your municipality or 
county, how will your clients and employees respond? Will they come for your services or come to 
work? What if misinformation about the disease is spread by fearful and ill-informed stakeholders? 
The distraction and lost productivity from this fear is a potential for loss. We recommend you 
consider the following:

•            Create a response – your leadership team should adopt a united front to address the 
fears of clients and employees. What is your position on employees who feel sick? What if employees 
are too afraid to come to work? Decide now so you can be consistent.

•            Carefully communicate – decide what you want to communicate to employees and to 
customers, if anything at all. Encourage people to be appropriately careful, but not stoke fear.

•            Update your disaster response plan – What is your worst-case scenario? How would you 
handle it? A little bit of preparation now will save time and money if you were to be directly 
affected by the results of fear or the disease itself.

It is important to note that depending on the size and scope of your organization, you may have 
other policies that could respond. There may also be other stakeholders, like a Board of Directors 
or donors, who need to be considered. We encourage you to contact us direction for a discussion on 

where you

stand with your specific coverage.