COVID-19 and Insurance Cover

By Byron McPherson, Reliance Partners and Nick Hill, Hillster Marketing The impact of the COVID-19 outbreak is reaching far and wide. Many companies have completely changed their business models in a matter of days. This is to be applauded and is no mean feat. Changes range from making hand sanitiser instead of alcohol and delivering fitness training online to becoming delivery-only companies. With these, potential risks are created, and your insurance policy coverage may be affected. For example, what if someone injures themselves doing a live stream workout compared to a face-to-face fitness session or if a car mechanic uses FaceTime to help someone fix their own car and they damage it. Then there are the potential Workers' Compensation risks of having employee's home-working and cyber risks from being in a less secure IT environment. If your business has made a significant change, you should speak to your insurance broker to ensure your insurance policy will still cover your business operations. Listed below is additional information regarding COVID-19 and some specific areas of insurance.

The World Health Organisation (WHO) recently declared COVID-19 as a "pandemic" - a term used for a disease that has spread globally and for which humans have no immunity. This differs from an epidemic which is usually confined to a region.

All insurance comes with exclusions, and it's important that you are aware of the ones affecting your policies. Exclusions regarding epidemics and pandemics may apply to various coverage types. Here are some examples.

We strongly recommend you speak with your broker to determine what key coverage applies in relation to an infectious disease outbreak. Business Interruption policies generally respond to physical damage to an insured's property. If there is no physical damage to the insured's property caused by COVID-19, then no cover would be applied. This means the only cover an insured can make a claim on is if there is an extension for "Infectious or contagious diseases". However, this cover only operates when the infectious disease results in closure or evacuation of an insured premises. We are not aware of any circumstances in which COVID-19 has resulted in closure or evacuation of an insured's premises. Even so, there may be other reasons why the claim may not be covered.

Travel policies usually exclude cover for pandemics. They also exclude cover if you travel to regions where DFAT has issued a warning not to travel. However, it's not quite so straightforward. For example, you are likely to be covered if you were already overseas when the warning was issued and then you need to cancel the rest of your trip. The same applies if you began your travel before the outbreak occurred. Travel cover is usually more restrictive for personal holiday trips than for corporate travel though, so make sure to thoroughly check your policy.

Travel policies usually exclude cover for pandemics. They also exclude cover if you travel to regions where DFAT has issued a warning not to travel. However, it's not quite so straightforward. For example, you are likely to be covered if you were already overseas when the warning was issued and then you need to cancel the rest of your trip. The same applies if you began your travel before the outbreak occurred. Travel cover is usually more restrictive for personal holiday trips than for corporate travel though, so make sure to thoroughly check your policy.

It's highly unlikely that events insurance will provide cover for pandemics unless there is a specific exclusion on the policy.

Providing there is no exclusion for infectious diseases, public liability is likely to include cover for COVID-19. However, if you hold an event that goes against government directives (e.g. regarding gatherings) then you would not be covered.

All businesses should have business continuity plans (BCPs) in place, and now might be the time to review or enact them. This might include enabling employees to work from home and ensuring they understand directives regarding self-isolation and avoidance of contact. The burst of creativity the crisis has created is amazing, keep it up. Just make sure your insurance keeps pace. And above all, stay safe.