More Employers Ask Workers to Sign COVID-19 Waivers, but They May Not Be Legal

sign waiver

As lawsuits against employers continue rising amid the coronavirus pandemic, some businesses are requiring workers to sign waivers absolving them of liability and responsibility should they contract the virus.

Eight percent of executives surveyed by law firm Blank Rome said they would require that their workers sign waivers of liability before returning to the workplace.

While employers are trying to protect themselves from a liability that didn’t even exist a year ago, some human resources legal experts have expressed concerns that they may not be necessary ― and may be unenforceable.

The moves come as employers are wrestling with numerous risks that the pandemic has wrought, and with the U.S. Senate having proposed legislation that would limit the liability of employers for workers who become sick during the pandemic. A number of states have also enacted laws or emergency regulations that make it harder for employees to sue employers for negligence over COVID-19.

COVID-19-spurred employee lawsuits have mostly centered on employers not providing the proper protections for workers, discrimination or for being laid off for refusing to come to work.

Legal experts caution that employers cannot require workers to waive rights they may have, such as access to workers’ compensation benefits or the right to file a complaint with OSHA.

They also say that some employers may consider waivers as a green light to not take precautions against COVID-19, but in such cases the waivers would likely not be legal.

If a worker claims they caught COVID-19 at work and the facts back that up, they would likely have access to workers’ compensation benefits (some states even require it). But if the employer was negligent, the employee could have further legal avenues to pursue besides workers’ compensation, rights that cannot legally be waived, lawyers say.

So even if an employee were to sign a document waiving their right to file a complaint if they feel their employer is being negligent, they may still have recourse.

Requiring workers to sign waivers could present a number of legal issues, according to the law website <i>nolo.com</i>, including:

  • Courts in some states are reluctant to enforce liability waivers in the workplace because of the superior bargaining power of employers over their staff.
  • Workplace morale could suffer if your employees think you are placing your own economic interests above workplace safety.
  • Any waiver employees sign would not protect your firm from lawsuits filed by their families should they contract COVID-19 if staff are infected at work.
  • A waiver might be unnecessary in states that have passed laws granting immunity to employers for claims made by workers infected with the virus.

Another option

While employees who refuse to sign a waiver of their company’s liability may have grounds to challenge their employer, some liability lawyers say that employers instead of a waiver can ask their staff to sign a social contract that requires:

  • The employer to follow Centers for Disease Control and Prevention guidelines and take all necessary precautions to prevent the spread of COVID-19 at work, and
  • The workers to comply with their employer’s requirements on mandates on wearing masks, social distancing and not coming to work if they have symptoms or of they think they have been exposed to someone with COVID-19.

This type of agreement won’t protect an employer from a lawsuit, but it does spell out that they are following authorities’ recommendation for protecting employees.

While employees who refuse to sign a waiver of their company’s liability could have grounds to sue, those who sign this type of acknowledgement of new workplace rules and government guidance are less likely to be successful if they are fired for not signing. This is because the acknowledgement is not forcing them to give up any of their rights and is rather for their and their co-workers’ protection.

These social contracts also would provide workers with a list of their responsibilities when working during the COVID-19 pandemic, and outline what their employer is doing to protect them.

Raft of Bills Would Add New COVID-19 Rules for Employers

workplace safety

The California Legislature is working on a number of new measures to protect workers in the state during the COVID-19 pandemic.

The measures take aim at “holes” in the system that may leave employees who contract the coronavirus on the job without workers’ compensation benefits, footing higher utility bills because of working at home and needing sick leave time available to them should they contract the disease.

Gov. Gavin Newsom said he would work closely with legislators to help the measures become law.

Below we look at the legislative moves that have gained the most traction and are supported by the governor.

Workers’ compensation

There are two bills (one in the Assembly and the other in the State Senate) that would make it easier for employees to be paid workers’ compensation if they contract COVID-19 (presumably on the job).

Assemblywoman Lorena Gonzalez (D-San Diego) has introduced AB 196, which would create a presumption that essential workers who contract COVID-19 were infected while on the job and that the employer would not be able to contest the claim.

Meanwhile, Sen. Jerry Hill (D-San Mateo) has introduced SB 1159, which would require workers’ compensation coverage for COVID-19-related illness or death for employees who contract the virus. The infected employee would not have to prove they had contracted the coronavirus on the job, and would require the employer, if contesting the claim, to prove that it hadn’t been.

The law essentially codifies an executive order made by Newsom in May, but it does not cover new worker claims made on or after July 5.

Both bills are a work in progress and may eventually be merged into one. Hill is talking to labor and business groups about his measure, and which industries would be covered and whether the provisions would be retroactive.

Job-protected leave

Assemblyman Ash Kalra (D-San Jose) has introduced AB 3216, which would prohibit employers from refusing a request for up to 12 weeks of job-protected leave so that a worker can care for a child whose school has been forced to close due to a health emergency declared by a local, state or federal authority.

Easing meal and rest break rules

AB 1492 would allow employees more flexibility in when they can take meal and rest breaks when working from home. The measure by Assemblywoman Tasha Boerner Horvath (D-Encinitas) would also require employers to pay staff who skip those breaks for an extra hour of work.

Employers would also be required to pay for additional equipment and a portion of the workers’ internet and utility bills when working from home. This is because it has been reported that many people who have been forced to work from home are seeing higher usage bills.

Reporting workplace outbreaks

AB 685, authored by Eloise Reyes (D-Colton), would require employers to notify their employees, the Division of Occupational Safety and Health, and the State Department of Public Health of any employee exposure to COVID-19. The notification must be made within 24 hours of when “the employer knew of or should have reasonably have known of the workplace outbreak.”

If the employer fails to notify or notify within 24 hours, they can be subjected to a misdemeanor infraction carrying a $10,000 fine.

Insurers Don’t Have to Pay for Testing Returning Workers: HHS

covid-19 testing

New guidance from the Trump administration absolves insurers of the responsibility of paying for COVID-19 tests that are required for workers who are returning to the job.

The guidance, released by the departments of Health and Human Services, Labor and Treasury, means that employers will likely either have to foot the bill themselves as they screen workers during the pandemic or pass those costs on to their workers. But in states that require employers to test workers, passing testing costs on to staff is usually not an option.

There had been some confusion about who would pay for the tests after the Families First Coronavirus Response Act required insurers to cover COVID-19 tests without patient cost-sharing. The new guidance has added a new caveat to that rule: that insurers cannot require health plan enrollees to pay for the test if it is deemed “medically appropriate” by a health care provider.

“Testing conducted to screen for general workplace health and safety (such as employee “return to work” programs), for public health surveillance for SARS-CoV-2, or for any other purpose not primarily intended for individualized diagnosis or treatment of COVID-19 or another health condition, is beyond the scope of section 6001 of the [Families First Coronavirus Response Act],” the guidance states.

Resistance from advocacy groups

The guidance was met with resistance from employer and consumer groups, with the advocacy group Families USA arguing that the nation’s workers should not be saddled with additional costs during these economically uncertain times.

Employers can require employees to be tested before returning to work, but the Pacific Business Group on Health said it would be highly unusual for a large employer to require testing for employees without paying for the tests in full.

Democrats have asked the administration to withdraw the guidance, but the White House has said it won’t and that it would like to see Congress come up with a solution in its next economic stimulus package for the coronavirus pandemic.

The HHS has said that states should use the $10.25 billion that lawmakers appropriated for testing to help pay for tests of returning workers.

Insurance companies may opt to pay for such tests anyway, as a precautionary measure. America’s Health Insurance Plans, however, is calling on more government support to cover the costs, which it says could be between $6 billion and $25 billion annually.

Commercial Property Insurance Rates Rise as Risks Grow

commercial insurance rates

Commercial property insurance rates are on the rise across the country as insurers continue wrestling with the toll of increasing natural disasters, rising social unrest around the world (including the U.S.) and the COVID-19 pandemic.

Additionally, insurance companies have become more stringent in their underwriting by restricting some coverages and excluding risks that may have been covered in the past.

The rate increases and stricter underwriting are not a function of the COVID-19 pandemic, as rates have been on the rise over the last two years as other risks and claims payouts have grown, but the outbreak has added more pressure to rates.

According to a report in the trade publication Business Insurance, brokers are reporting average property insurance rate increases of 20% for policies that renewed on July 1, 2020. But rate increases are even higher for commercial enterprises that have certain types of occupancies, large and complex sets of risks, a history of losses or natural catastrophe exposure (hurricanes, tornadoes and wildfires, for example), the report states.

As mentioned, insurers have also taken various steps to restrict coverage, including:

  • More strike, riot and civil commotion exclusions (this coverage was common in most commercial property policies).
  • More stringent communicable disease exclusions for business interruption coverage (while most business interruption coverage on property policies excluded pandemic risks, a small portion of policies did not).
  • Reduced coverage for business interruption claims that don’t include physical damage to the business.
  • Reduced limits.
  • Higher deductibles.

Civil disturbance coverage

The recent riots and protests that erupted across the country also caused widespread insured damage as many stores and businesses were looted, set on fire or vandalized.

Coverage of riots and civil disturbances is a standard part of most property policies, and insurance experts estimate the insured damages could surpass $10 billion as the rioting was not just limited to one city.

There had never previously been a civil disturbance event of this magnitude in the U.S. and insurers had not priced the likelihood of it happening across the nation at one time.

Globally, insurers have started introducing exclusions and raising rates after large-scale protests and civil unrest mushroomed in Hong Kong and Chile last year, causing widespread economic damage and disruption

The scale of damage in the U.S. from our own civil unrest has pushed a handful insurers to start restricting or removing coverage for strikes, riots and civil commotion. The change is not industrywide.

Policy and rate changes for this coverage are also based on geography, as the risks of civil disturbances are greater in cities than in suburbs and smaller municipalities and towns.

Businesses can also take steps to mitigate risks, such as installing video cameras for security, as well as burglar alarms and other measures to reduce their premiums.

COVID-19

Terms and conditions are also being tightened due to the COVID-19 outbreak, after a number of insurers were sued for not paying business interruption claims on the grounds that there must be physical damage to the property.

As a result, many insurers introduced more explicit wording to make their infectious disease exclusion “bulletproof,” as one broker told Business Insurance.

Catastrophe exposure

In addition, insurance companies are looking at how much exposure they have to natural catastrophes, and are hence scaling back coverage or pulling out of some markets. They are looking at markets that have exposure to:

  • Hurricanes,
  • Earthquakes,
  • Wildfires,
  • Floods,
  • Storms

For example, in California a number of commercial and personal property insurers are restricting the number of policies they will write in areas that are at risk from wildfire. Some are also requiring that property owners create buffer areas around their buildings to reduce the chances of them catching fire during an event.

The takeaway

As a business property insured, you will want to do all you can to make your organization as insurable as possible in order to enjoy the best rates. That means taking measures to mitigate risks and following insurers’ recommendations.

That could include installing security cameras and alarms, as well as sprinklers and other fire prevention systems. If your business is exposed to a regular natural catastrophe, you should also take steps to reduce the chances of your property being damage or destroyed.

Five Steps for Protecting the Data of Your Firm, Customers and Employees

cybersecurity

In this era of connectedness, increased telecommuting, smartphones that keep staff connected to the office and cyber criminals constantly waging attacks on businesses, you need to do all you can to protect your firm’s, employees’ and customers’ data.

It’s a heavy lift to try to set up protocols for the various areas where hackers and bots can infiltrate your company’s database, and for a small company the task could be overwhelming. But if you approach your cyber security by focusing on the main pinch points — your greatest vulnerabilities — you can put together a coherent and effect cyber defense.

You can divide your focus among five distinct areas and create clear initiatives for each:

Physical space

The first vulnerability is your office and your network hardware, where even a small oversight can lead to significant losses in hardware and data. Strong security controls of physical environments are a critical foundation for your business.

What you can do: Always lock your network closet or room and other sensitive locations. Use high-security locks and numbered, physical keys with restrictions on duplication. If it makes sense for your business, install video surveillance at entrances and exits. Don’t trust your memory — maintain a device and computer inventory.

People

Numerous people encounter your firm’s data, including full- and part-time employees, contractors, interns and clients. Anyone who has access to business devices, spaces and apps is vulnerable to unwittingly giving away information.

What you can do: Call us to confirm that your cyber liability insurance reflects your actual risks and that you have the correct coverage and riders you may need. You should conduct security-awareness for your staff (and new hires) regularly to show them what you expect in terms of protecting your company’s data. This can include theft prevention and minimizing data leakage, to protecting sensitive data and what to do in the event of a suspected breach.

Also, train them how to detect social-engineering hacking scams. Cover how these scams work by trying to trick your staff into clicking on links in e-mails that contained phishing, malware or ransomware. They should look for spoofed names or e-mail addresses in the e-mails which will often ask employee for passwords or to click on an attachment.

Apps

Applications may be cloud-based or stored on devices. While it can be challenging to manage the many apps people use on their devices, there are best practices for keeping data away from the people who want to use it against you.

What you can do: Ensure that all apps that your staff use on company-issued phones use two-factor authentication (and strongly urge them to follow this practice if they are using their own devices for work). Restrict app permissions to only the few people who should really have it. Also set the apps to automatically update, so as to ensure you are always using the software with the latest security patches.

Finally, enable security notifications so that suspicious activity, such as adding a new user without approval, doesn’t go unnoticed.

Mobile devices

Smartphones and tablets hold most — if not all — of your most sensitive data. Working remotely is gaining popularity, and with that comes a responsibility to learn how to treat your devices like the highly valuable possessions they are.

What you can do: Enable remote wipe and location tracking on your employees’ tablets and smartphones in case of the devices being lost or stolen. Do not use public Wi-Fi. Your employees should only use trusted Wi-Fi, VPN or their mobile hotspot.

Require a password, PIN or biometrics to unlock phones. And, because there will be sensitive documents and e-mail on your employees’ devices, be sure they have enabled local data encryption. Double-check this, as not all devices will have it turned on by default.

Networks

Your network is at the heart of your company’s connectivity and operations. It connects to all of your company’s devices and apps, as well as to the internet. This is the gateway to your business, so it should be regularly maintained and kept secure.

What you can do: For the visitors and vendors who occasionally need to use your network or internet connection, create separate guest and private networks. Do a little research or ask a trusted IT expert and use the latest Wi-Fi encryption standards.

Finally, so much of network security is about management. Know which employee has what equipment by logging and auditing access to devices. Don’t wait for disaster to strike; proactively monitor, manage, update and secure devices, along with creating strong passwords.

Getting started

If you are a small business, all of the above is likely overwhelming, but if you put together smart processes and planning you can reduce your risks, such as:

  • Having processes in place for handing out equipment (keys, laptops, mobile devices) when hiring, and how to handle technology during terminations.
  • Planning and holding scheduled cybersecurity training.
  • Using a password management tool for all of your staff.
  • Calling us about cyber insurance.

New Emergency Workers’ Compensation Rules Take Effect

Workers' Compensation Policy

The Department of Insurance has approved emergency workers’ compensation rules dealing with COVID-19 and California employers.

The rules were recommended by the Workers’ Compensation Insurance Rating Bureau to bring fairness for employers’ experience rating during the COVID-19 pandemic amid shelter-at-home orders and for dealing with claims of workers who contract COVID-19 on the job. The following new rules took effect July 1:

1. Classification changes for staff working from home

As a result of the California stay-at-home order, many employers have altered employees’ duties so they can be accomplished from home, and often those duties are clerical-like in nature.

Under the rule, an employee can be assigned payroll classification code 8810 if:

  • Their duties meet the definition of a “clerical office employee” while working from home, and
  • Their payroll for the balance of the policy period is not assignable to a standard classification that specifically excludes clerical office employees.

There are a number of other classifications that already include clerical operations in their definitions, and those classifications would not be eligible for a change.

If you are reclassifying any employees to 8810, make sure to document all changes and maintain records of those changes. This rule is effective for as long as the statewide state-at-home order by Gov. Gavin Newsom is in effect, and 60 days after the order is lifted.

2. Non-working, paid staff

Salaries paid to workers who are at home not working, yet still collecting a paycheck, will be excluded from payroll for workers’ comp premium calculation purposes when the payments are less than or equal to the employee’s regular rate of pay.

Again, make sure you document these payroll disbursements and maintain records to show they were not working, so that they are not chargeable to your workers’ comp policy.

3. COVID-19-related claims

All claims directly arising from a diagnosis of COVID-19 shall not be reflected in the computation of any employer’s experience modification.

The Rating Bureau said in proposing this change that the since the occurrence of COVID-19 workers’ compensation claims are unlikely to be a strong predictor of future claim costs incurred by an employer, their inclusion in X-Mod calculation would not meet the intended goal of experience rating.

The takeaway

Now that these rules have taken effect, if you are having employees work from home you need to assess if the duties they are performing are largely clerical in nature and discuss with your carrier or us whether you should change the code to reflect their new duties and reduced risk of occupational injury or illness.

You will need to document those changes and keep careful records, as the change would likely affect your premium.

Additionally, under a second Newsom order, it will automatically be presumed that any employee who is working on-site and contracts COVID-19 caught the virus in the scope of their work.

Those claims will be eligible for workers’ compensation benefits under the order. But under the Insurance Department’s decision, any COVID-19 workers’ compensation claims will not affect an employer’s experience and X-Mod.

New Telecommuter Class Code in the Works

telecommuters

Due to the COVID-19 pandemic, California’s workers’ compensation rating agency plans to implement a new class code for telecommuting employees on Jan. 1, 2021.

The Workers’ Compensation Insurance Rating Bureau of California started work on the new classification after swaths of companies ordered employees that could work remotely to start working at home after the state and local governments issued stay-at-home orders to contain the spread of the coronavirus.

The new code for telecommuting workers will be 8871. Under a prior emergency rule, the Rating Bureau had recommended that employees who were thrust into telecommuting because of the COVID-19 outbreak be assigned the 8810 “Clerical Administration Employee” code.

This is a major change in the class code structure and will affect employers throughout the state, so it’s important that you prepare for it if you have staff working from home.

While the telecommuting code will be new to California, a similar code ― 8871 “Clerical Telecommuter Employees” ― has already been in use for a few years in a number of other states where the National Council on Compensation Insurance serves as the rating bureau.

To qualify for that class code, an employee must spend “more than 50% of their time performing clerical duties from a clerical work area located within their home.”

Additionally, the NCCI released an advisory in March 2020 that employers should start reporting class code 8871 for employees who have been asked to work from home due to the pandemic.

The specifics

Up until now, in California, telecommuting employees whose duties meet the definition of clerical employees in the California Workers’ Compensation Uniform Statistical Reporting Plan have been assigned class code 8810 “Clerical Office Employees,” or their employer’s standard classification if that classification specifically includes clerical office employees.

The Rating Bureau has proposed that class code 8871 be the code for clerical employees who work more than 50% of their time at their home or other office space that is not on the employer’s premises. This will help the Bureau track accident and injury rates for telecommuting employees, and it will align California’s class code system with those of a majority of states (the NCCI is the rating bureau in 38 states).

As mentioned, the class code will be used only if the class code for the employer does not include clerical employees. Currently there are 41 class codes that include clerical staff. There are also two codes that specifically exclude them.

If a company includes all of its staff in the same code, any clerical staff on its payroll are not assigned the 8810 Clerical Employee class code and are instead assigned the code for the company as a whole.

For the sake of continuity, the Rating Bureau has recommended that those 43 class codes be amended to specifically include or exclude clerical telecommuting staff.

What you should do

If you have staff on your payroll who are telecommuting, you should start preparing your accounting or bookkeeping software to add in this code for when your policy comes due in 2021. Starting work on this now can help your insurer more accurately price your future policies, or when they decide to audit your payroll.

Conversely, you should not attempt to change the class code for your currently telecommuting employees now or at any time before Jan. 1, 2021, as the final rules have not yet been written, approved or promulgated. They also need to be approved by the state insurance commissioner.

The Rating Bureau plans to apply the rate for the class code for clerical employees to the new class code for the first few years and until it can gather enough data to set a unique rate for the code. That could take a number of years, as the Bureau typically uses a window of the past three years of claims experience and costs when setting class code rates.

Attacks on Cloud Services Grow Amid Telecommuting Boom

cloud

As more of America’s workers were asked to work from home due to the COVID-19 pandemic, cyber criminals jumped at the opportunity to take advantage, it seems.

Remote work means work being handled on the cloud as employees share files and need a convenient way to access them.

But cyber criminals are banking on workers letting down their guards when they work from home, so it’s no surprise that while cloud service usage among enterprises jumped 50% between January and April, external attacks on cloud accounts boomed 630% in the same period.

Also, hackers and other cyber scammers orchestrated systematic attacks on collaboration tools like Cisco WebEx, Zoom, Microsoft Teams and Slack, according to the “Cloud Adoption & Risk Report ― Work from Home Edition” report by McAfee.

The risk to enterprises cannot be overstated as criminals try to take advantage of the sudden shift to telecommuting by thousands and thousands of organizations as they try to cope with the COVID-19 pandemic and continue operating during stay-at-home orders.

Employees are your organization’s first line of defense. You can protect your company by encouraging personnel to be skeptical of e-mail from unfamiliar sources.

Training your staff

Before the COVID-19 crisis, PricewaterhouseCoopers simulated a phishing attack on mid- to large-size financial institutions, finding that:

  • 70% of phishing e-mails were delivered to their targets, and
  • 7% of recipients clicked on the malicious link.

The danger with phishing and ransomware attacks is that it only takes on click, one missing endpoint agent, one failed alert, one unsuspecting employee, and the criminals can take control of your network and your cloud files.

Many of these attacks come in the form of what’s now called “social engineering attacks.” PwC recommends coaching all of your employees to take the following precautions, particularly on their mobile devices:

  • Be skeptical of e-mails from unknown senders, or from familiar people (like your company’s CEO or your doctor) who do not usually communicate directly with you.
  • Don’t click on links or open attachments from those senders.
  • Don’t forward suspicious e-mails to co-workers.
  • Examine the sender’s e-mail address to ensure it’s from a true account. Hover over the link to expose the associated web addresses in the “to” and “from” fields; look for slight character changes that make e-mail addresses appear visually accurate — a .com domain where it should be .gov, for example.
  • Grammatical errors in the text of the e-mail are usually a sure sign of fraud.
  • Report suspicious e-mails to the IT or security department.
  • Install the corporate-approved anti-phishing filter on browsers and e-mails.
  • Use the corporate-approved anti-virus software to scan attachments.
  • Never donate to charities via links included in an e-mail; instead, go directly to the charity website to donate.

Cyber insurance

Cyber insurance is designed to protect your company by insuring you for network security issues, privacy, interruption to your business, media liability, and errors and omissions.

For phishing, ransomware and other cyber attacks, the network security and business interruption portion of the policy would mainly come into play.

Network security coverage — This includes first party costs. That is, expenses that you incur directly as a result of a cyber incident, including:

  • Legal expenses
  • IT forensics
  • Negotiation and payment of a ransomware demand
  • Data restoration
  • Breach notification to consumers
  • Setting up a call center
  • Public relations expertise
  • Credit and identity monitoring

Business interruption — When your network, or the network of a provider that you rely on to operate, goes down due to an incident, you can recover lost profits, fixed expenses and extra costs incurred during the time your business was impacted. This includes loss arising from:

  • Security failures, like a third party hack.
  • System failure, such as a failed software patch or human error.

Insurance Costs Related to COVID-19 Could Top $100 billion

insurance cost

COVID-19-related losses for property-casualty insurers are likely to top $100 billion, with workers’ compensation accounting for about a third of all payouts, according to a new report by Wells Fargo & Co.

The report estimates that workers’ compensation could see total COVID-19 claims payouts of up to $34 billion, but that factors like the severity of workers’ comp cases and the number of deaths will determine the final payouts. This may spur rate hikes in workers’ compensation after years of soft pricing in most of the country.

The majority of workers’ compensation claims are likely to be in the health care sector, and the rest among “essential workers” who have had to remain on the job

One report by the Division of Workers’ Compensation at the Florida Department of Financial Services found that health care workers and those working in protective services accounted for 83.3% of COVID-19 indemnity workers’ comp claims filed in Florida as of May 31.

The Wells Fargo report forecasts that the claims are likely to put pressure on rates for number of lines of insurance. Besides workers’ compensation, it predicts that these other lines will see significant claims payouts:

Business interruption — The second-highest claims payouts, the report states, will be for business interruption losses related to the COVID-19 outbreak. Wells Fargo estimates that total claims payouts will be between $4 billion and $24 billion.

However, most business interruption coverage, which is typically tied to commercial property policies, does not cover losses from pandemics. That said, some stand-alone policies have had more liberal coverage wording that will require the insurers to pay the claims.

Event cancellation — The report estimates that event cancellation losses will account for nearly 30% of industry losses. This insurance protects event revenues and related expenses against the risks of cancellation, postponement, curtailment, relocation or abandonment of an event for unforeseen circumstances beyond the control of the event organizer.

Beyond the lost revenue, the costs of canceling a large event can run into the tens of millions of dollars, sometimes more. While the specific terms of event cancellation policies vary, many offer broad “all-risk” or “all-cause” coverage that is triggered by any unexpected cause that is not expressly excluded under the policy.

Other policies, however, are written such that only specific causes or risks (like terrorism or natural catastrophe) trigger coverage.

While some event cancellation policies include exclusions for infectious or communicable diseases (which would include COVID-19), many do not.

Other lines of insurance that could sustain losses due to the pandemic include:

  • Travel insurance — Issues that could come into play include emergency evacuation, repatriation and out-of-country medical benefits that cover costs for the treatment and transportation of sick or injured employees. Policies typically offer optional coverage for unexpected medical expenses.
  • Directors and officers liability — These claims could concern legal action for not taking timely measures regarding COVID-19 to protect the organization, as well as legal action for financial damage or even insolvency. 

The topside

The report also notes that there are some lines of insurance that could benefit from lower claims due to the COVID-19 pandemic. Chief among these is commercial auto, due to the substantial decrease in vehicle accidents as there have been fewer cars on the roads at a time of shelter-at-home orders.

What Business Insurance Policies Cover Rioting, Looting

looting

As protests around the country descended into rioting and civil unrest, many businesses that have been looted, or seen their shops damaged or completely destroyed, will obviously be turning to their insurance to file a claim.

While many companies were unsuccessful in filing business interruption claims for the COVID-19 crisis, claims for damage and theft from rioting and looting are more likely to be paid. A number of coverages will come into play depending on the damage and lost income a business suffers at the hands of rioters, vandals and looters.

Property damage

Standard commercial property policies cover damage to a business property caused by fire, explosion, riot or civil commotion, vandalism or malicious mischief. This would include coverage to the structure of the business, as well as any inventory, fixtures and other contents. Business owner’s policies also include this risk.

The business personal property coverage portion of the policy would cover damage and theft if rioters break into a real estate office, for example, and steal computers, burn furniture and destroy office equipment. That said, the damage would be subject to limits (specific or blanket), as well as any deductibles required by the policy.

Commercial vehicle damage

Automobiles are covered under the optional comprehensive portion of a commercial auto policy, which you should have for all your vehicles. This will pay for damage to the vehicle and its contents caused by fire, falling objects, vandalism or rioting.

Comprehensive coverage will cover the gamut and will pay you if a vehicle is:

  • Stolen,
  • Damaged, or
  • Destroyed (for example, burned).

One of the most common damages to vehicles during riots is broken windshields, which you can usually get covered with an optional glass coverage rider.

Business interruption coverage

Companies that are forced to close as a result of riot and looting damage may have coverage for business interruption under a business property policy.

The policy may also cover lost income because a business had to close after riots. It would often cover dependent properties or have contingent business extensions of coverage. Also, coverage can apply if a business suffers a loss of income because of curfews or if authorities bar access to a property.

Coverage is typically triggered if there is direct physical damage to the premises.

You should note that many policies require a 72-hour waiting period before a policyholder can begin making a claim. That’s because the first three days of business shutdown, access constraints or limited hours of operation because of a civil authority action are often excluded from coverage.

There may also be a limit to the claim period. A standard limit is up to three weeks of losses.

Filing a claim

When filing a claim, read your policy in its entirety to determine how to best present it. It’s important to understand the policy’s limits and deductibles before spending time documenting losses that may not be covered.

If you are going to file a claim, document all damage. You should have receipts for all your inventory and fixtures. Here’s what you should do:

  • Take photos of all damage.
  • Contact your agent and file a claim immediately.
  • Clean up to protect your building, but do not make major repairs until you talk to the insurance company.
  • Keep receipts for any remediation work.

If you’re going to file a business interruption insurance claim, you will need:

  • Pre-riot financial statements and income tax returns.
  • Post-riot business records.
  • Copies of current utility bills, employee wage and benefit statements, and other records showing continuing operating expenses.
  • Receipts for building materials, a portable generator and other supplies needed for immediate repairs.
  • Paid invoices from contractors, security personnel, media outlets and other service providers.
  • Receipts for rental payments, if you move your business to a temporary location.

A final thought: Filing a business interruption claim is not easy, particularly when estimating losses. The process is highly complex and can be contentious. If the insurer disagrees with your loss estimates, they may have specialists audit your claim.