COVID-19 & Insurance

We are experiencing an extremely high  volume of service requests at this time and are working hard to respond to calls and emails as quickly as possible.

Thank you for your patience.

This is an unprecedented situation requiring complex and rapid business decisions. Information is changing quickly and here is where we are as of April 2, 2020.

Business Interruption Coverage – Lost Revenue
Liability Coverage
Premium Payments & Status of Payment Relief
If Your Business is Closed
What Options Do I Have?
What’s Next?

Business Interruption Coverage – Financial Loss

In general, insurance companies at this time have taken the position on most typical business insurance policies that there is no coverage for business interruption or financial loss.

For business interruption coverage to be available, it normally requires that there be a property damage loss that is covered by the policy.  If there is a property damage loss that the policy covers, then typically business interruption coverage becomes available.  In other words, most business insurance policies were created to cover physical damage to property and the financial loss that happens as a result of that property damage.

As a result, we are currently seeing insurance companies taking the position that there is no business interruption coverage because:

  1. COVID-19, pandemics, quarantines, viruses or diseases are not considered to be property damage, so if there is no property damage, the business interruption coverage does not apply; and
  2. Typical business insurance policies have an exclusion that excludes coverage for loss or damage caused by delay, loss of market or loss of use or occupancy. So, if your losses are caused by the government ordering you to close your business because it’s deemed “non-essential”, or if customers are staying away from your business or postponing appointments due to quarantine or social distancing, it is expected that your claim would be subject to this exclusion.

These conditions in business insurance policies is why we’re seeing such large relief packages being brought out by the different governments as most businesses will not have coverage for the financial losses they are experiencing.

There isn’t a lot of precedence for the current situation.  It is likely that these conditions and exclusions will get challenged in court in the coming months and years, which could change the coverage available, but at this time, this is the best information we have available.

Liability Coverage

Unfortunately, there is no clear answer at the moment as to whether the General Liability coverage on a policy will respond to COVID-19 related lawsuits.  There isn’t any precedence to give direction as to what to expect.  We have asked the insurance company for clarification on their intent so we can advise our client’s better, but we do not have an answer on this yet.

The General Liability coverage on the policy includes coverage for sickness or disease sustained by a person, which is good.  However, there is some question as to whether the virus could be considered pollution or possibly spores/mold/fungus (depending on the specific allegations made), which general liability policies don’t cover.  These are common exclusions in Canadian General Liability policies.

It is quite possible that this will have to be debated between lawyers to determine if coverage will apply as there are a variety of allegations that could be brought forward and would have to be tested in court to determine if coverage will apply.

If you are continuing to operate your business and interact with customers and co-workers, we recommend that you follow the recommendations of the health authorities and have a clear and enforced pandemic policy to limit transmission of the virus and keep sick workers home.

Premium Payments & Status of Payment Relief

I am sorry to say we do not have an option for payment relief at this time.  Under normal circumstances in the past, there’s been times when we’ve been able to provide some temporary payment relief.  When we do this, it means that I have to pay the premium to the insurance company while we wait for our customers to make the payment.  This is a regulatory requirement.  Unfortunately, this situation is too widespread for me to be able to pay the premiums for so many of our customers.  I know this isn’t the answer you’re hoping for, but I hope you can understand.

Unless the government relaxes some of these regulatory requirements, and we haven’t received any indication that they are considering this, we are limited with the options we can provide.  The provincial and federal Insurance Brokers Associations are working to try to find a better solution to this situation for consumers, and we are continuing to voice our concerns with them, the regulators and insurance companies.  In the meantime, we have waived some fees to help ease some of the burden where we can.

We currently have a few ways to make payment without any cash up front:

  1. Monthly payment plan. A 2 month down payment is required and we’ve temporarily allowed this to be paid by Visa or MasterCard. At this time, regular monthly withdrawals, which typically start the following month, would then be made by automatic withdrawal from your bank account.
  2. Visa or MasterCard for the full amount.

If Your Business is Closed

If your business location is closed and you’re not currently operating but intend to when you’re permitted to re-open, we recommend you take the following steps:

  1. Maintain the heat to minimize the chance of frozen pipes or damage to equipment and furnishings.
  2. Turn the water off at the water main to limit the chance of damage from a burst pipe or other plumbing issues.
  3. Check the premises as often as authorities are allowing or at least once a week if it’s safe for you to do so.

Note that if you are moving contents away from your business premises, please let us know so we can ensure you have the right coverage as policies typically limit coverage for items moved away from the premises.

If your business location is closed and you do not intend to return or re-open, let us know right away as your policy will likely require alterations to ensure you have proper protection in place.

 

What Options Do I Have?

If managing your existing insurance payment isn’t feasible, there are a few options available:

  • Delete Surchargeable Services: If you are no longer providing certain services, you could delete them from your policy to help reduce your premium.  You will have to remember to notify us before resuming the services.
  • Reduce Optional Coverages: Consider if it makes sense to reduce any coverage options.  This may help to reduce your premium.  However, this is not without risk to you, but perhaps less so than if you were to cancel the coverage entirely.  Let us know if you’d like to consider this as an option so we can properly advise you of the risk involved for your situation.
  • Monthly payment plan. A 2 month down payment is required and we’ve temporarily allowed this to be paid by Visa or MasterCard. At this time, regular monthly withdrawals, which typically start the following month, would then be made by automatic withdrawal from your bank account.


What’s Next?

Like all businesses right now, we are waiting to see what the federal and provincial governments are going to do to help ease the impact COVID-19 is having on citizens and businesses. We’re all in this together.

We will update this posting as new information comes available that affect insurance.

In the meantime, if you need to see if adjustments can be made to your policy reduce costs, please contact us. We are currently experience a very high number of customer service inquiries and are working hard to respond to calls and emails as quickly as possible. We appreciate your patience. Thank you and best wishes during trying times.

Sincerely,
Chris Ingoe, President (signature)
Chris Ingoe, CAIB
President

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