In reaction to questions and insecurities that have arisen due to the increasing threat of COVID-19, we prepared some answers and clarifications on the most relevant topics. In this blog, we will address the ten topics that were most asked about and create some clarity about what the coronavirus could mean for your company.
The coronavirus has been categorized as an epidemic. Similar to natural disasters or terrorism, the general conditions of travel insurances exclude epidemics from their cover. Travel cancellation insurance is meant to cover events with a direct link to the insured person in question. Work-related events or health situations (you or family members) are examples of what is included. Terrorism, forces of nature and epidemics are not.
If an insured person or company wishes to cancel a (business) trip due to the coronavirus, the insurer will not reimburse the annulation costs as the policy does not cover epidemics. On the other hand, insurers will, in most cases, cover the insured person if they get infected by the virus while on a trip. In that case, insurers will cover the medical costs on site, possible extended stay, and repatriation. However, we notice that insurers have started to respond to the impact of the virus worldwide and change their conditions, both in negative and positive ways towards more restrictive or more flexible terms.
Accidents at work
As long as teleworking laws are respected, an accident at home is considered as an accident at work. Not so long ago, structural homeworking was also extended with occasional homeworking. An accident at home is therefore insured, provided that this accident happened during the performance of the employment contract.
A corona infection will not be accepted as an accident at work, for it to be recognised as such, the person has to demonstrate where and when the infection had occurred.
Considering the rapid spread of the virus, this is almost impossible. Under the current circumstances, teleworking should be encouraged to everyone who can.
Property, Business Interruption & Homeworking
In order to be able to rely on business interruption coverage, there is an absolute requirement that material damage must first be present and covered in order to be able to appeal to business damage coverage.
It is, therefore, difficult to provide such policies. There is one specific exception to this, but it is also severely restricted and not every company is given the opportunity to subscribe to this cover. This is due to the strict requirements of the insurers as well as the limited offer in terms of insured capital (most of the time a strong sublimit): it’s called the non-damage business interruption.
If you own a company or factory that needs to be closed down due to the coronavirus, there is an insurance to limit the influence on your business results: you can insure against non-damage business interruption. If the government decided to either deny access to your company, or close it down, the insurance would cover the actual loss incurred during the insured period, and the extra expenses during the period of liability would also be covered.
Attention: if a Belgian company with its production site in China, in the region where the government has decided to institute a lockdown, wishes to take out insurance for business interruption following the closure of the site, no offer or cover can be made since the risk was already known and a pre-existing risk. This can, in no case, be taken into account. The same will apply to the operating losses of other sites following the fact that the production of goods is interrupted due to the non-delivery of the production.
An important note: until now, the insurance market has been very restrictive. For example, it should be a case in which your company suffers from an infection from the inside. Sub-limits apply. In addition, it is found only within a certain audience on international programs, to which insurers provide a strict screening of BCP etc.
Last but not least, we will discuss the extension called 'theft'. In this context, it is important to mention the impact on homeworking. While everyone is carrying out teleworking activities, the company is left unmanned. If the company has a subscription covering theft, this can cause problems as the latter is only one of the requirements in order to claim cover (need to control).
Therefore, we advise our customers to inform us about this actively, so that we can make an exception in the relevant policies.
In case of contamination among the crew, a vessel with cargo can be put under quarantine for sanitary purposes. In this context, the quarantine would obligate the ship and its cargo to remain in a port or within a certain distance of the coastline. In case of an All Risk coverage (Art. 8 POLANT), the risk of cargo damages or losses because of the quarantine is covered by the insurance. Even in the case of more limited coverage (Art. 6 POLANT), the sea risks during quarantine remain covered for total loss or for all damage or losses (Art. 7 POLANT).
However, any consequential damages or indirect losses are not covered as the insurance only applies to the insured cargo itself. An example would be damage due to delay: if Easter decoration would arrive after Easter, this loss would not be covered. Although, we must distinguish this case from the damage to the goods caused by the delay due to an insured hazard. If perishable goods are damaged during transport due to unforeseen delays, then of course damage has been done to the cargo.
Another scenario could be when the journey of the goods would be changed in any way by, of course, a change of means of transport, transhipment, temporary stays, or reshipment. The coverage will be maintained during this journey.
In conclusion, any cargo damages or losses suffered due to the measures taken to contain the coronavirus are covered by insurance. The coverage will always be limited to the damages or losses on the insured cargo, consequential and indirect damages are not included and thus, will not be covered.
Consequently, in the event of damage, your insurer will examine each case separately in function of the applicable policy conditions.
Sport & Events
For the time being, all sports events in Belgium have been cancelled until April, but this measure is expected to be extended. Many organizers are still hesitant to postpone the sports events to a later date. The administrative bodies are expected to take the lead on this. For example, the Belgian Volley Association has decided to end all competitions for the rest of the season; and UEFA has just decided to postpone the European Football Championship to 2021.
Organizers who are forced to cancel their events and are not insured, or have not included cancellation clauses in their contracts, should contact all contractual parties involved as soon as possible in order to minimize the losses.
A frequently asked question is whether the cancellation policies cover this. Certain specialty insurers foresee the possibility of extending "communicable diseases". However, we must also immediately report that this is usually accompanied by an exhaustive list of the insured pandemics and epidemics, which means that it must be a known virus, and this is not the case in the case of COVID-19.
Given the current situation regarding the corona virus, we recommend that you pay attention to your Cyber coverage, in particular the amount of your insured capital.
Many employees started working from home and they have to connect remotely to the company’s network, sometimes even by wi-fi. This inevitably creates increased risk, especially with regard to the security of your data. Furthermore, more homeworking means more laptops. This increases the chance of theft or loss of the devices and therefore possibly of loss of data for which you are liable.
In addition, cyber criminals eagerly take advantage of the exceptional situation and send more phishing emails and malware related to spread the coronavirus. For example, emails seemingly come from the management, asking the employees working from home to click on a link to a so-called intranet of the company.
Directors & Officers
The corona crisis increasingly demands rapid and pertinent measures, both by the government, individuals and companies. As a director, you bear the responsibility to make the right choices for your company, both economically and medically. The consequences of every decision are of course not always known in advance and therefore always imply a certain risk.
Your D&O policy offers adequate cover in these exceptional times, both in the event of a civil claim for compensation by third parties, as well as in criminal matters (for example: the correct measures were neglected against the personnel, so the Public Prosecution Service / Labor Prosecutor turns on you.
Within the limits of the policy conditions, Concordia will also assist you to the maximum. In addition to legal, financial assistance is also provided, both towards third parties (claim compensation) and towards yourself (for example: image recovery in the event of negative comments on social media) that would result from an incorrect policy decision.
In some civil liability cases, it can be useful to consider legal aid if you can take legal action against extra-contractual party because of, for example, a non / late / insufficient action or measures.
A condition for this, in the context of the general legal assistance cover, is that the mirror clause does not play tricks on the exclusions that apply in your civil liability policy. This includes penalties as well as the exclusion with regard to "late or non-fulfillment of commitments" as well as "damage that is the direct result of measures taken by the government, besides the exclusion of contractual character."
And finally, we also mention two other sectors:
If your restaurant, bar, etc. has been temporarily closed, some insurance companies extend your insurance coverage for motor, liability and accidents at work for free if you are offering delivery. Of course, as long as the government measures are in place. If those services were not in place before the corona crisis, it is important to adapt your current fleet, civil liability and accidents at work policies.
One of the major consequences of government measures in our country, as well as in the nearby countries, is that certain transport companies are considering requesting a temporarily suspension of their coverage. This is a logical reaction, but we should handle it with care as not all risks are always excluded in that case. It is sometimes advisable to request a reduction of premium, but this also depends on the statistics, the profile of the customer, etc.
With our top 10 Q&A, we hope to have offered you a guide during these special times. However, the fact remains that the insurance climate is responding to this crisis in a highly volatile manner. From free temporary extensions in the context of delivery to the insertion of specific exclusions in the context of coronavirus, or even to withdrawing the possibility to still take out coverages for the future. The latest one is already applied to the cancellation policies and the Non-Damage Business Interruption, but other branches are also likely to fall under this.
If you, as a company, notice that you are not adequately insured in any of the situations described in this blog, please do not hesitate to contact us. We will work with you closely to find out what we can do to deal with similar situations in the future!