Employees wearing facemasks in an office setup

The Need for Updated Insurance Policies in the Wake of COVID-19

Jul 20 2020

At the height of the COVID-19 pandemic, the world was brought to a standstill. We’ve seen a slew of travel bans and public restrictions across the world. The workplaces and shops of nonessential businesses were forced to close down as an added safety measure. Everyone was confused about where to get help in such times of peril. Many businesses turned to their insurance providers only to be faced with a denied claim—resulting in strained relationships and class-action lawsuits. Surely, there is a call for an update to insurance policies to adapt to current needs.

In this article, we explore the issues regarding business insurance and COVID-19, and why an update to insurance policies is needed. Moreover, we’ll give some tips on the next steps to take for business owners who are reading this article.

Let’s get started!

Hospitality business continuing to operate with added safety measures

The Effect of COVID-19 on Canadian Businesses

Businesses of all sizes were tested on how they could adapt, survive, and maybe even thrive in such challenging conditions. For the businesses that were allowed to operate, they faced the challenge of implementing the appropriate safety measures for their staff and customers. As well as the need to constantly re-evaluate their operations and supply chain to prevent the spread of the virus.

And for businesses that were forced to close their offices, some were able to adapt by implementing an effective remote working strategy. Some businesses were even able to thrive by pivoting to address the needs of the nation while dealing with COVID-19.

There are, however, numerous casualties as well. More than 50% of Canadian companies have lost at least 20% of their revenue due to COVID-19. Businesses of all sizes had to let go of staff or request credit to survive. And sadly, many small businesses opted to close permanently instead of waiting out the imposed shutdowns.

By May 2020, territories across Canada started to gradually allow for the reopening of businesses. Safety measures such as required PPE, social distancing, and limiting the capacity of buildings/vehicles are still in place as part of a national and global effort to fight the virus. For how long this “new normal” will stay remains to be seen. This pandemic has inspired a newfound focus on crisis and risk management for businesses to prevent ever being blind-sighted by a disruption of this scale again.

What Are The Areas of Concern Regarding Business Insurance Policies and COVID-19?

However, even if businesses are allowed to re-open, the COVID-19 issues are far from over. In times of confusion and loss, businesses are wondering how much their insurance policies will actually help them.

When it comes to business insurance and COVID-19, there are mainly two areas of concern:

1. Lost Income & The Business Interruption Insurance

Government-imposed restrictions hit some businesses hard and some are hoping that their business interruption coverage will save the day. Some business interruption insurance policies do cover businesses if they close because of the action of civil authority (e.g. government-mandated closure, government-issued curfews.)

The problem, however, is that the typical business interruption insurance was never designed to address a pandemic-related shutdown. This is because most of the current business interruption insurance policies exclude viruses or communicable diseases.

Closeup of a gavel about to hit a sounding block

2. Legal Risks

For businesses that remained operational through the massive shutdown, some have faced COVID-19-related lawsuits. Long-term care facilities, for example, are faced with numerous proposed class-action lawsuits alleging negligence that caused unnecessary deaths connected to the pandemic. In a similar fashion, as more and more establishments re-open, they can face legal and financial risks if negligence causes an employee or a customer to be ill or deceased because of the virus.

Even though a lawsuit like this seems far-fetched, if there is evidence of negligence regarding PPE, social distancing, and other health-related safety measures, it can make for a viable claim. This is where insurance coverage for general liability, professional liability, and worker’s compensation should be able to help. This is yet another area of concern because some of these insurance policies exclude communicable diseases.

How Should Commercial Insurance Policies Be Updated For COVID-19?

Multiple insurance companies have developed a strained or hostile relationship with their clients because of denied claims relating to the COVID-19 pandemic. And while the virus continues to haunt everyday life, there will be more problems between businesses and their insurance providers if nothing is to change.

It is not uncommon for people to be confused and distraught during such times—and the number of COVID-19-related lawsuits against businesses only reflects that change needs to be done to adapt to the times. This is true for the insurance industry as well. At the bare minimum, there is a call for more transparency about the exclusions of any kind of business insurance.

And perhaps there is a call to re-evaluate existing policies as well. An updated insurance policy should be able to provide a form of coverage when it comes to lost income and negligence lawsuits related to COVID-19. Therefore, these following insurance policies should be updated:

  • Business Interruption Insurance
  • General Liability Insurance
  • Professional Liability Insurance
  • Worker’s Compensation Liability Insurance

What Industries Should Be Concerned About Getting Updated Insurance Policies?

Even as Ontario continues to reopen, there is no guarantee of when this pandemic will end or if there would never be a disruption of this scale again. We’ve seen that this pandemic has affected every kind of business out there. For this reason, all industries are encouraged to take the next step in refining their risk management strategy - starting with a revisit of their business insurance policies.

As A Business Owner, What Is My Next Step?

COVID-19 poses an unforeseen and unique set of challenges for all kinds of businesses. Among these challenges are the legal and financial risks connected with the viral disease. Clarifying the coverage of your existing business insurance policies is a must—if you haven’t done so already. Having a complete set of insurance policies will not be enough if they aren’t updated to protect you from the risks of the current landscape.

Where Can I Get Business Insurance That’s Updated For COVID-19?

As one of the top providers of business insurance in Canada, KASE Insurance helps you to be always one step ahead. We make it a point to give innovative and transparent commercial insurance solutions for all of our clients. We can put together business insurance policies that are tailor-fit to the current needs of your business during these times.

We are proud to serve numerous businesses from various industries. Through the years, we’ve garnered awards and vast industry recognition. With KASE Insurance, you can be sure that you are in good hands.

If you have any questions for us, we’d be happy to connect. Contact us today or get a quick quote to get started!

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