Insurance and COVID-19
COVID-19, the official name for the respiratory illness also known as Coronavirus, is now considered a pandemic. We are only in the early days of this unprecedented event and the situation is evolving at a rapid pace.
As a guide, NECAGuard have put together a short summary of how various common insurance policies may respond to certain events for NECA members.
As always, please refer to your own tailored policies as their cover and your situation may vary.
Your Public Liability policy provides cover if you are legally liable for causing bodily injury to a third party or damage to a third party’s property.
A possible claim scenario could be if you were accused of not following adequate protocol which resulted in the transmission of COVID-19 to one of your customers. The third party would need to prove that you were negligent, resulting in their loss.
In the absence of a blanket exclusion for pandemics such as COVID-19, we would expect a good public liability policy to provide a defence for claims of this nature.
Personal Accident & Sickness
If you have selected cover for sickness under your personal accident policy, NECAGuard would expect this to cover claims for loss of income as a result of the covered person contracting COVID-19.
What would be unlikely to be covered is the loss of income from quarantine or isolation with no symptoms or a positive test. General loss of income due to the pandemic without sickness for the covered person would also not be covered.
Policies may have limitations around pre-existing conditions or pandemics, consult the provider of your policy for details.
Workers Compensation, Management Liability and Statutory Liability
Employers are required to provide and maintain a safe and risk-free working environment for your employees, contractors and visitors. You are required to identify hazards and associated risks in the workplace, then do what is reasonably practicable to eliminate or control those risks. COVID-19 is one such potential hazard.
If you have an employee who contracts COVID-19, it could potentially be compensable through Workers’ Compensation, provided a link can be established between the infection and their employment. This link might be easier to identify in the very early stages of population infection where outbreaks are isolated and can be more confidently traced back to employment. However, the link to employment is expected to quickly weaken as COVID-19 infection becomes more widespread within the community and the source of infection cannot be confidently established.
Property including Business Interruption
Business interruption insurance is available under a commercial property policy (sometimes also referred to as consequential loss as it is primarily designed to provide cover following damage to your property).
You may notice some policies have an extension covering infectious disease or closure by public authority. The intention of these extensions is to cover localised events connected to the property such as legionnaires’ disease. Cover under such an extension is intended to be limited in nature with insurers preserving their claims performance against large scale losses.
Whilst the wording under your own policy may vary, there are usually two incidents which both need to occur:
- Origin of outbreak of disease is at your property; And
- Closure is forced by government or relevant authority
In addition to this, following the outbreak of SARS in 2003/2004, the insurance industry added an additional exclusion to make it clear the intention of this extension was to not provide cover for pandemics.
If you have a corporate travel policy and booked your travel before the outbreak of the disease, your policy should provide cover.
Some domestic travel policies have a general exclusion for pandemics which may not provide cover at all (regardless of when the travel was booked or policy was bound).
Additionally, some policies may not provide cover for cancellations following the bankruptcy of airlines or travel agencies.
Policies are unlikely to respond to claims if a booking was made after the outbreak was classified as a pandemic.
We encourage you to seek advice from your provider. Whether we are working from the office or working from home, the NECAGuard team at Willis Towers Watson is available to take your call or email.
T: 1800 335 014
Willis Australia Limited
ABN 90 000 321 237 | AFSL No. 240600
CKA Risk Solutions Pty Ltd | ABN 33 109 033 123 | AFSL No. 276915
Disclaimer: While all reasonable skill and care has been taken in preparation of this document it
should not be construed or relied upon as a substitute for specific legal advice from your legal
adviser, or for specific advice on your insurance needs. No warranty or liability is accepted by
Willis Australia Limited its shareholders, directors, employees, other affiliated companies for any
statement, error or omission.