As COVID-19 makes its way around the globe, the issue is no longer whether coronavirus disease 2019 will become a business issue, but how to prevent it from becoming a significant one — and which aspects of an organization will be most affected.

Beyond keeping residents and patients healthy, COVID-19 is affecting many other aspects of senior living communities’ and skilled nursing facilities’ back-end businesses, especially as it relates to workers’ compensation claims and supply chain interruption. Here are answers to some questions you may have.

When does COVID-19 lead to a workers’ compensation claim?

Generally, when an employee catches the flu from someone at work, it is not covered under workers’ compensation insurance. Those claims have been found not to be compensable and are denied.

The same applies to the coronavirus. If an employee tests positive for COVID-19 – whether from a fellow employee or a resident – and / or if an employee causes the virus to spread among your staff members, residents or patients, your organization needs to file a workers’ compensation claim on behalf of all of your infected workers. The employee(s) will need to prove that another employee or a resident had the virus and that the only way they were exposed to it was through that contact.

It cannot be assumed that the insurance company is going to accept and pay workers’ compensation benefits for a claim for COVID-19 exposure. An investigation will ensue, and employers who have taken steps to limit the exposure to their employees will be helping the insurance company determine whether a claim is compensable.

If multiple employees claim they now have the virus due to working with that employee or resident, then the workers’ compensation claim, if found to be covered, likely will be considered a catastrophic loss claim. Workers’ compensation policies provide benefits for lost time, permanent disability, medical expenses and even death benefits when an injury is found to be caused by a work exposure.

Contact your broker today to review your workers’ compensation policy details ahead of any issues, to determine the best course of action should residents or employees begin to show coronavirus symptoms or claim they may have been exposed to the virus through working or living at the community.

Are business interruption / supply chain issues due to COVID-19 a covered peril?

The latest — and for many businesses, most significant — fallout to the coronavirus pandemic is the business interruption it is causing. For many senior living community owners and operators, the pandemic has affected their supply chain — organizations no longer can ship or receive products necessary to their work, or the virus has caused other significant personnel or materials delays.

A variety of issues can cause business interruption for a senior living community. On a small scale, business interruption could manifest in the inability to source face masks. For other communities, it could mean the inability to source new resident / patient beds or critical wound care items or even to get workers to come in to work their shifts. 

Unfortunately, business interruption policies don’t cover pandemics. Instead, they require a trigger, such as a degree of damage to the insured’s property, for coverage to kick in.

When endorsed into a policy, contingent business interruption coverage may apply to loss due to the suspension of the insured’s operations caused by direct physical loss of or damage to dependent property, such as the premises of a key supplier, contractor or customer. There does not need to be damage to the insured’s property to qualify for contingent business interruption coverage. Rather, the insured would have to show covered property damage at the dependent property location, and at this point, contamination may not be enough to satisfy those requirements.

Policy reviews for business interruption or contingent business interruption coverage include provisions relating to mitigation costs or expenses to avoid losses that might be covered under the policy if steps aren’t taken, the definition of property damage as well as exclusions for virus, bacteria and pollution. 

It is critical that you talk with your insurance broker about your business interruption and contingent business interruption policy coverage to find out what parameters, limits and exclusions are in place and what to look out for ahead of a potential claim.

Before doing so, gather the answers to the following questions:

  1. Are your suppliers’ premises / workplace / production lines / HVAC or other building equipment contaminated or damaged somehow?
  2. Are your or their employees unable to get to work because of illness, quarantine or inability to commute?
  3. Are they unable to produce goods due to government order?
  4. When might they be back in business?
  5. Do they have insurance or other type of recovery assistance?

What can employers do right now?

COVID-19 has, to date, infected more than 100,000 people around the world – and counting. The time to prepare your business is now. Prepare your community and employees to minimize liability with the following best practices:

1. Write an emergency preparedness plan. If you don’t already have one, name a working group of employees from across your organization to create a business continuity, emergency preparedness and even pandemic reaction plan. Consider business interruption issues specific to your business and location, and establish procedures that can be enacted on a moment’s notice.

2. Report claims immediately. Time is of the essenceExposure and potential claims, whether workers’ compensation or business interruption, need to be submitted as early as possible. Doing so will allow for a thorough and efficient review of the case and all coverage scenarios. As with any other local state of emergency, as the COVID-19 pandemic spreads, claims have the potential to get backed up.

3. Review policies. Carefully analyze your current policies with your broker, both primary and excess. This analysis will reveal whether an event such as this one is covered by your insuring agreements, and which exclusions apply to your specific policies. Many factors will determine whether a claim will be covered, including the type of loss, the type of coverage, and the terms and conditions of specific policies. Knowing your coverage up front will take the guesswork of the process.

4. Take precautions with sick employees. It goes without saying (almost) that employees who may have been exposed to the virus should be sent straight to a physician to be tested (calling first), and should be allowed to return to work only if test results come back negative. Require employees waiting for test results to remain at home until a negative result is official. Be open with your other staff members about anyone awaiting test results. Let them know that they have been tested and that the results were negative, if that’s the case.

How COVID-19 fully will play out on U.S. soil over the coming months is unknown. What we do know is that it is very likely that every domestic business will be affected. It is time to prepare for a potential business interruption or employee quarantine issue now ahead of potential liability.

Thomas Steinbrenner is a senior vice president at Hub International. He has the unique background of having held insurance company management positions in claims, underwriting and sales.