April 7, 2020

Property and Casualty Insurance Coverage and COVID-19 Update

The COVID-19 pandemic and the actions taken to mitigate its spread, has significantly affected the operations of businesses of all sizes and across all industries. As the resulting financial impact deepens, businesses continue to look for insurance solutions. The Fedeli Group is dedicated to assisting our client-partners through this process, and offers the following update, highlighting recent efforts to compel coverage, COVID-19 claims reporting advice and insurance company assistance:

Property/Business Interruption and Civil Authority

General carrier guidance continues to indicate a narrow coverage interpretations and likely denial of COVID-19 related claims for Property/Business Interruption and Civil Authority. This has prompted various litigation, primarily from the restaurant & entertainment industries, while several states have introduced bills to force insurers to provide coverage for COVID-19 related losses, regardless of policy language or specific exclusions.

The following link Ohio HB 589 provides the complete Ohio bill as proposed. Key elements include:

  • For insureds with existing Property/Business Interruption policies, businesses located in Ohio, and 100 or fewer employees,
  • Insurers must recognize global virus transmission or pandemic as a covered peril, indemnify insured’s and provide coverage for any loss of business or business interruption for the duration of the state of emergency, subject to existing policy limits.

Statutory and regulatory responsibility for insurance resides at the state level, with each state maintaining control over insurance offerings within their respective jurisdictions. Therefore, benefits of successful litigation or legislation would be limited to the state of adjudication or enactment. To provide a more widespread solution, industry groups are working with members of Congress to create a federal backstop, PRIA -Pandemic Risk Insurance Act, similar to TRIA- Terrorism Risk and Insurance Act, that was written into law after the September 11, 2001 terrorist attacks.

While these efforts are underway, they are all unresolved, and a quick resolution does not seem likely. In the interim, it’s suggested that insureds immediately place their insurers on notice for their potential COVID-19 related business interruption losses. This should be done, regardless of coverage expectations, to avoid the possibility for a late-notice denial, provide a coverage determination for consideration of litigation, and ensure you’re in the queue, should future legal or governmental actions successfully provide a more beneficial coverage interpretation. Keep in mind, once coverage is acknowledged, a well-documented proof-of-loss in support of your claim will likely be required before any claim payment is issued.

Workers’ Compensation

If you believe a COVID-19 work-related incident meets the Workers’ Compensation compensability threshold:

  • Exposure/Contraction occurred within the course & scope of employment, and
  • Individual was at a greater risk than the general public, i.e. First Responders & Healthcare Workers.

Report the claim immediately, including the following to trigger enhanced protocols for expeditious review & response:

  • Mention COVID-19 in the accident description.
  • Indicate when symptoms of COVID-19 began, and if the diagnosis has been confirmed.
  • Provide information for perceived higher risk of exposure for the affected worker and the nature of that exposure.

In most cases, exposure and/or contraction of COVID-19 is not considered to be an allowable, work-related condition, and therefore, not subject to Workers’ Compensation coverage. Consequently, the responsibility for most of these claims shift to the healthcare program, including the associated cost burdens for the employee. Fortunately, under the recent enacted Families First Coronavirus Response Act (FFCRA), Group Healthcare Plans must waive cost sharing for COVID-19 testing and related services, to help mitigate the financial impact.

Inquiries specific to COVID-19 and Ohio Workers’ Compensation are addressed in the link below:

BWC’s COVID-19 Frequently Asked Questions

Insurance Company Assistance

Below are some ways Insurers are responding operationally to assist policyholders during the COVID-19 crisis:

  • Premium payment leniency – Many are offering extensions on premium payments and will consider non-standard extensions on an individual basis.
  • Holding notice of cancellation for non-payment – Many will not issue notices of cancellation for non-payment reasons during any approved payment extensions, and existing accounts payable related notices of cancellation may be considered for rescission. However, please note that underwriting-related notices of cancellation may still be issued during this period, if permitted under the controlling state regulation.
  • Renewal policy extensions – For policies that were issued non-renewal notices, each account request will be evaluated on an individual basis.
  • Premium audits – For policies subject to audit, premium auditors are being extremely flexible and working with policyholders to schedule a time that best works for them. Many allow you to submit audit data electronically and interact virtually to maintain social distancing and mitigate exposure. While there is no need to complete premium audits immediately, the corresponding premium adjustments cannot be made until the audits are completed.

As noted above while many insurance companies proactively started allowing for leniency in payments The Ohio Department of Insurance specifically addressed payments through Bulletin 2020-07 titled “Property and Casualty, Life, and Long Term Care Insurance Premium Payments During State of Emergency.” The Bulletin applies to all insurance companies that provide property and casualty insurance in the State of Ohio and allows for a 60-day grace period to pay insurance premiums or submit information. During the time period of the declared State of Emergency, insurance companies should accept deferred payments at no cost, extend payment due dates, or waive late or reinstatement fees. Of note, failure to pay premiums by the end of the grace period may subject the policy to a retroactive cancellation, in accordance with the policy terms. The Bulletin expires upon the expiration of the state of emergency declared by Governor DeWine on March 9, 2020.

In Summary

The impact of COVID-19 continues to evolve with new or changing requirements/restrictions almost daily, increasing the impact of related losses. While Insurers’ coverage determinations for COVID-19 related claims will come down to specific policy language, the ultimate determination may come from judicial or legislative intervention, but those processes are likely to be protracted. Consequently, urgent consideration, for filing your COVID-19 related claims now, is suggested. Please contact your Fedeli Group team for assistance with filing your claim or to discuss any questions or specific concerns you may have.

Still have questions or concerns? Let’s talk. 

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