We are currently in interesting times globally with the on-going situation around the outbreak of COVID-19. As news headlines about the disease continue to increase, so has concern over its potential to impact on employee welfare, disrupt supply chains, slow business operations and impact business confidence.
At Megalines we have received and continue to receive a number of queries regarding insurance following the outbreak of the virus. Below is an outline of Key Insurance Considerations that may be helpful for Businesses regarding the subject of Insurance and COVID-19.
It is true that specific policies for business loss due to an infectious disease outbreak are uncommon, however, there are a range of business insurances related to risks that may occur in an outbreak situation, and this information is to provide general information to aid understanding. As each policy wording is different and unique from Insurer to Insurer, we strongly recommend you contact your insurance broker to check what key coverages may apply to cover loss relating to an infectious disease outbreak.
Business interruption insurance
Will a typical Business Interruption Insurance policy cover financial losses arising from the Coronavirus outbreak?
Many businesses, particularly those who deal with China or rely on Chinese suppliers, are asking whether they will be able to claim for business interruption and revenue losses as a result of the COVID-19 crisis and its associated disruptions to travel, import and export activities.
We can confirm Business Interruption coverage under Property Insurance, where Gross Profit cover is selected does not respond to COVID-19 claims. COVID-19 was listed under the Biosecurity Act 2015 on 24 January 2020, triggering an industry wide exclusion.
Furthermore, on a general note, human infection with COVID-19 will not, of itself, constitute as ‘physical damage’, which is the triggering requirement for cover under traditional business interruption policies.
Public liability insurance
What it typically covers
Protects the owner or operator for legal liability to pay compensation to a third party in respect of injury, including defence costs. The definition of ‘injury’ can vary from policy to policy and may include infectious disease or illness
We advise you check with your insurance broker if your policy has a special clause that covers disease and illness, how this might apply in terms of preventative protocols and whether coronavirus might be considered a known risk
Management liability and directors’ and officers’ liability insurance
What would likely be covered?
Legal costs involved in responding to claims for damages (or other relief), resulting from negligence or errors and omissions by senior managers or executives in carrying out their duties. This includes work health and safety breaches, crisis containment etc.
What they don’t cover
Awards for sickness and bodily injury are typically not covered
We advise you check with your insurance broker about the extent of bodily injury exclusions which can vary from policy to policy
Cancellation or abandonment of events insurance
What it typically covers
Cancellations of events due to various impacts, including closure by a public authority or a ban on public meetings and events because of the threat of communicable (ie. infectious) diseases
What it typically doesn’t cover
If the event organiser decides to cancel out of fear of infectious disease or reduction in attendance
We advise you check with your insurance broker if communicable (ie. infectious) diseases are included under your policy
Workers’ compensation insurance
What it typically covers
Lost income and costs if a worker contracts an infectious disease in the course of their employment
What it doesn’t cover
People putting themselves at risk through serious and wilful misconduct
Ask your insurance broker about the terms of eligibility in your state
Marine cargo insurance for goods in transit
What it typically covers
The majority of the word’s trade is insured on conditions similar to those noted in the Institute Cargo Clauses (A). Institute Cargo Clauses (A) covers physical loss of, or damage to, the insured goods
What it typically doesn’t cover
A policy may not support a claim unless there is physical loss or damage. Certain risks are specifically excluded unless there is a supplementary clause that allows for them. These exclusions include delay that may occur due to quarantine and additional shipping costs and surcharges that do not form part of a physical loss or damage claim
Life Insurance and Income Protection policies
The question commonly asked is would Life or Income Protection policy respond should one suffer death or illness due to COVID-19?
We have reviewed this with a number of our insurance partners and to date have NOT found any “pandemic” related exclusion in the policies. We stress this may not be the case for all policies. It is worth mentioning too that trustees of superannuation companies have the ability to alter terms at their own discretion so please keep this in mind.
Corporate Travel Insurance policies against cancellations due to Coronavirus?
A typical Corporate Travel Insurance policy will provide cover for cancellation costs where the travel destination has reached DFAT Advice of Level 4 – Do Not Travel and was not at this level at the time of booking.
You can check the current DFAT Advice Levels on https://www.smartraveller.gov.au/, the Department of Foreign Affairs and Trades website.
Fear of travel is not a covered event under a Travel Insurance policy. This includes travel to areas that have known cases of COVID-19 but have not yet reached DFAT Advice Level 4.
The coverage provided on each policy and the position taken by different insurers can vary. If you have concerns, we strongly advise you check with your insurance broker.
Important Notice: COVID-19 became a known risk on 24 January 2020, and as such, some insurers may look to decline claims arising from COVID-19 if the trip was arranged on or after 24 January 2020. Whilst not all insurers are taking this position at this time, it should be taken into consideration when making future bookings.
Businesses should take proactive measures now to review key insurance policies and business continuity plans.
Other Insurance Considerations due to changes in the way we now do business e.g. Working from Home, Unoccupied Buildings etc.
No doubt, changes in the way we do business introduces new levels of risks exposures, for instance where companies set up their employees to work from home, their IT infrastructure may become compromised or vulnerable as a result. These employees at home may not have the correct cybersecurity posture, a virtual private network (VPN) therefore Employers may want to be certain that they have adequate Cyber Insurance in Place
Employers also want to ensure that work devices, such as laptops and mobile phones, are secure and now insured away from the Office premises. Although most business property Insurance policies would carry a clause for Temporary removal from the insured Premises to some other premises in Australia for a limited period in specified situations and wordings vary from policy to policy so please do check with your insurance broker. This extension of cover is generally not provided to property in transit.
At Megalines, we empathise with all of our Clients and non-Client Businesses that may have been affected for the worse by this Global Scourge. We are here to help as always! Our Office doors may be closed at this time, we remain Open for Business thanks to our well-rehearsed and robust Business Continuity Plans. Call us on +61 3 8379 7300 or visit our website at www.megalines.com.au
Let us know how we can serve you better at this time.