There’s no doubt that the spread of COVID-19 across the world in a relatively short amount of time has impacted everyone greatly. The question is – Will insurance policies classify it as such? The short answer is “not at this time.”

An “Act of God” in insurance terms typically refers to a damaging event that is beyond human control, like an earthquake, hurricane or other severe weather storm. Although policies ceased to use “Act of God” language to describe such damage decades ago, a number of businesses have recently filed claims asking for coverage of coronavirus-related losses in an effort to alleviate some of the economic impact of the pandemic on their business.

To avoid this confusion, most insurance providers clearly list natural disasters and viruses as excluded perils in their policies. For the few that don’t, the “Act of God” insurance claim is currently under deliberation. All new policies, moving forward, are being written with COVID-19 exclusions.

Made on a company’s Business Interruption, Property, Event Cancellation or General Liability policy, “Act of God” insurance claims are being submitted in response to non-essential business closures or reduced business capacity due to the coronavirus pandemic and the business interruption it caused.

“Act of God” insurance policies traditionally require physical damage as a policy trigger, and the coronavirus pandemic is not being viewed as such. While application of coverage eventually may be decided by provincial and federal courts, or via government intervention, right now, the claim that coronavirus is an “Act of God” and therefore a covered peril, is subject to the individual carrier’s discretion.

While a “Pandemic Endorsement” does exist - and was successfully engaged by the NCAA and Wimbledon this year - it is not a common endorsement nor is it something small to mid-size businesses would have previously purchased due to its significant cost and lack of availability. Restaurants or bars that are functioning at reduced capacity and car dealerships or hair stylists that have shut their doors who don’t have such an endorsement will have difficulty claiming losses.

Because each policy is different, businesses that are experiencing a loss or some type of interruption directly related to the coronavirus pandemic should:

  1. Communicate to a broker. Explore the language in each of your policies and determine the best course of action if you feel you have a claim.
  2. Continue to document and report claims immediately. Without ample notice and prompt filing, coverage for any type of claim may 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 coverage is resolved.
  3. 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.

There is no doubt that the economic impact of COVID-19 will be far reaching – and for some it has been devastating already. Facing unprecedented financial disruption, America’s small to mid-size businesses are looking for relief anywhere they can find it. Yet an “Act of God” insurance claim is still very much in question and not viewed as such today.

Contact our Claims Practice for further clarification on your COIVD-19 coverage needs at pandemic_claims@hubinternational.com. Get the latest information, guidance and resources on Coronavirus (COVID-19) to help you protect what matters most on our Coronavirus Resource Centre.