Although the 21st Century has seen a variety of emergent deadly viruses, none have affected the U.S. workforce the way COVID-19 has.

At the core of the issue for employers and business owners is the liability they may be required to shoulder. If essential workers contract the virus on the job, spread it to others or bring it home to their families, could the business be liable for a workers’ compensation (WC) claim? Similarly, many businesses are suffering because they’ve closed their doors, or reduced hours and production due to COVID-19. Are these actions compensable with a business interruption (BI) claim?

The answer is: it depends. The clarification of insurance coverage remains largely undecided as it relates to WC and BI. Right now, the answer is almost exclusively at the carrier’s discretion. Application of coverage eventually may be decided by state and federal courts, or government intervention.

WC coverage is subject to each state’s jurisdiction. Currently, a few states – Kentucky, Washington State, Michigan and Colorado have officially ruled on WC and COVID-19. These states will provide WC benefits or wage replacement to healthcare workers and first responders during the time they are quarantined after being exposed to the virus on the job. Washington State WC coverage will pay for medical testing, treatment expenses and provide indemnity payments for those who cannot work, while the Kentucky Employers Mutual Insurance Co., said they will pay wage-replacement benefits for first responders or healthcare employees while in quarantine.

For non-healthcare workers and general employees in every other state, WC coverage remains a moving target and compensability will be based on the work of each individual class, and ultimately determined by the carrier and individual state. It has to be in the course and scope of employment.

BI is on the minds of every business owner at this time as well. Traditionally, BI coverage applies exclusively to physical damage of the business. At this time, COVID-19 is not being viewed as physical damage. Furthermore, many BI policies contain a pandemic/virus exclusion. Even BI policies with a pandemic endorsement are being reviewed by carriers at this time due to other exclusions in those policies that may prohibit coverage for COVID-19. The mandated closure of businesses has not yet altered the coverage position set forth by these policies.

A path to seeking claims coverage

In order to put your business in the best possible position ahead of a decision about a WC or BI claim, adhere to the following best practices.

  1. Document and report claims immediately. Without ample notice and prompt filing, coverage will likely be denied. There is no downside to filing claims as soon as possible. Doing so ensures that your business will be in the right place when applicability of WC and BI coverage claims are resolved.
  2. Provide comprehensive details surrounding each claim. File each claim with as much detail as possible to ensure thorough review of your coverage and unique scenario by the carrier.
  3. Record each individual claim by line of coverage. Doing so will make it easier to monitor carrier response internally and simultaneously provide your carrier with a simplified way to absorb multiple claims from your business.

Contact your HUB claims specialist for more information on how you can reduce your risk of coronavirus business interruption and workers’ compensation claims and increase the potential for coverage.