How COVID-19 is Affecting Insurance

covid-19 business’s newly released State of Coronavirus and Insurance Report details how insurers, consumers, and businesses have all been—and are continuing to be—impacted by COVID-19. Below, we highlighted a few points from the report relevant to the sign industry.

Unemployment insurance

With unemployment driven by government-manded shutdown orders hitting record numbers in all corners of the country, the federal government has stepped in with some changes to the unemployment insurance backstop to help people who are finding themselves, in many cases for the first time, without a job.

Congress passed the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which ushered in many changes, not the least of which is an overhaul to the unemployment insurance system.

Unemployment insurance is a joint state-federal program. Unemployment is funded through fees paid by employers based on how many employees they have on payroll and how much each of those employees earn.

The more someone earns before losing their job through no fault of their own, the more they will be eligible to get in weekly unemployment benefits — up to a state maximum. What the CARES Act did was add a $600-per-week bonus on top of what someone would otherwise be eligible to earn. So, say a worker in Oklahoma was eligible for the maximum $520-per-week payment. After the CARES Act subsidy, their unemployment benefit would more than double to $1,120 per week.

The CARES Act also extended the maximum number of weeks someone is eligible for benefits to 39 weeks – a full 13 weeks longer than most states’ benefits.

Traditionally unemployment was a program that was only available to W-2 employees – or rather people who are on a full-time payroll at a company. That left out self-employed people and so-called gig workers, such as rideshare drivers. The CARES Act changed that and made them eligible for unemployment benefits as well.

Business insurance

Businesses need insurance. Otherwise, their liability would be unimaginable. But in the wake of the COVID-19 pandemic, many businesses realized their coverage may not protect them from some of the things they thought it did, and in many cases, the policies had carve-outs in unexpected areas.

The first policy most businesses look to when they can no longer perform their primary function is business interruption insurance. That makes sense because their businesses were interrupted, after all.

Unfortunately, standard business interruption insurance won’t cover claims based on the COVID-19 pandemic and the ensuing governmental shutdowns because traditional business interruption insurance is meant to be an add-on to a property/casualty policy. For that property/casualty policy to kick in, and by extension the business interruption portion to kick in, typically, a business has to have some sort of physical damage to its premises first.

But, say a business could somehow prove that the pandemic caused physical damage. Businesses may still be out of luck because pandemics are almost always written in as exclusions for business interruption insurance policies.

All may not be lost for those business owners, though. Some states and jurisdictions are working with their legislatures and insurance regulators to evaluate whether COVID-19 should be covered under business interruption insurance, despite the policy language that appears to exclude it. Although several states have bills moving through their legislatures to try to compel this change, none yet have been acted into law, and it remains to be seen if those laws would even stand up in court.

Beyond business interruption insurance, business insurance has also been affected in other ways, too.

For example, with the army of white-collar workers working from home, many employers are questioning how workers’ compensation will be handled now that the workplace is no longer under the control of the business.

As a rule, workers’ compensation typically follows the employees as they move to in-home work. So, if someone’s chair collapses while they are in a Zoom call and they break an arm, that would likely be covered by the employer’s workers’ compensation plan. That said, coverage relies on the employee being injured in the course of their work. So, if they burn their hand cooking dinner, they would be on their own, even though that injury happened in their current “workplace.”

Workers’ compensation questions are also relevant to essential workers who are still working on their employer’s premises. And it is likely also going to get increased attention as the economy begins opening back up and people start filing back into offices.

If an employee is working on their employer’s site and subsequently contracts Coronavirus, and that employee can prove that they contracted it a) while working and b) because of their employment, they may be covered under the business’s workers’ compensation policy. However, proving all those things might be difficult for the employee, leaving some gray area for the lawyers to sort out.

Another area business insurance is being affected is in the billing policies. Some insurers are waiving late fees for premiums if a business had to shut down because of COVID-19, so it would be worth it for struggling businesses to reach out to their insurance company if making those payments becomes an issue.

For more insight into how COVID-19 is affecting insurance, including health, life, and special events coverage, view’s report in full here.

Photo: Scott Graham on Unsplash