COVID-19: Risk Management Considerations to Reduce Legal Exposure
March 13, 2020
The following post highlights COVID-19 risk management considerations, steps to reduce your legal exposure while continuing operations and an overview of how insurance policies/coverage will respond to the outbreak. A PDF of the below information can be found here. For additional COVID-19 resources and risk management recommendations, please visit our COVID-19 Risk Management Center.
RISK MANAGEMENT CONSIDERATIONS
- Assign designated personnel to continuously monitor information & published guidelines surrounding the outbreak from the following organizations: Centers for Disease Control (CDC); World Health Organization (WHO); and any applicable local municipalities. Document that these monitoring protocols are taking place. Document that your organization is meeting or exceeding published guidelines as they change.
- Continuously communicate these guidelines internally to your workforce on an on-going basis. If employees become sick and expose others in your office, it is very important to control the message to your workforce. Engaging a Public Relations Firm to help manage the message is recommended. To minimize the exposure of this risk to your employees, the safety and prevention guidelines from the CDC should be reviewed and adopted.
- Continuously communicate externally to your customers and vendors how you are handling the COVID-19 situation. If employees become sick and expose customers or vendors, it is very important to control the message to the public and your customers. Engaging a Public Relations Firm to help manage the message is recommended. To minimize your exposure to this risk and to best position the legal defensibility of your organization, the safety and prevention guidelines from the CDC should be reviewed and adopted.
- Establish & Communicate a “Working from Home Policy” for your employees. Allow employees that are infected or think they have been exposed to work from home.
- Establish & Communicate a “Notification Process” for any employee that becomes sick or is in contact with someone who is sick, such as a family member.
- Establish & Communicate a “Business Travel and Events Policy” for your employees. Limit non-essential business travel and meetings. If your organization is considering cancelling an upcoming event due to COVID-19, we recommend reviewing the contract to determine if it includes a “force majeure” provision that permits cancellation due to situations that are beyond your control such as epidemics, health emergencies or acts of government which would permit the contract to be cancelled.
- Establish & Communicate a “Visitation Policy” for your employees around vendors and clients visiting your facilities. Visitors should disclose that they are not sick and are symptom free.
Documentation Strategy: Document the negative. document that you have had no reports of any contact with the virus or those who have COVID-19. Get into the practice of keeping a log documenting that no one has reported any contact with such person.
Risk Alert! Information Technology personnel should work to amplify remote work capabilities for your organization. But watch out! Work from home policies could increase your organization’s risk to coronavirus related cyber-attacks and email phishing scams. IT staff should address this risk.
PROPERTY & CASUALTY INSURANCE REVIEW
Below is a review on how Property & Casualty Insurance Policies will typically respond to COVID-19:
Business Interruption Insurance Coverage: This insurance is typically part of a Property Insurance Policy and provides funds to replace the net income that your organization otherwise would have earned during a period of interruption and continuing operating expenses due to a covered cause of loss. Business Interruption Insurance requires “direct physical damage” to Property to trigger coverage. Since the COVID-19 does not “damage” the building or property, in most cases coverage will not be triggered for Business Interruption, Contingent Business Interruption or Civil Authority Insurance Coverage. Depending on the specific scenario and the applicable case law, your Graham Company Claims Consultant will advocate on your behalf if there is a potential to trigger business interruption coverage (such as the argument the COVID-19 contamination rendered the property temporarily “uninhabitable”), but this will not be an option in most situations.
Workers Compensation & Employers Liability: A standard Workers Compensation Policy includes coverage for medical expenses and lost wages from an “occupational disease”. If your employee can establish a direct connection to your workplace as the source of the COVID-19 infection, your Workers Compensation coverage may be triggered. A Foreign Package Policy will broaden the coverage available to employees traveling overseas for business to potentially include coverage for emergency medical evacuation expense in locations with an outbreak of COVID-19.
General Liability: General Liability Insurance provides coverage for claims by third parties for Bodily Injury arising from your premises, operations, work or products. This could include an allegation that your organization did not follow infectious disease protocols recommended or required by governmental authorities (such as the CDC) which resulted in a 3rd party becoming infected with COVID-19 and suffering bodily injury or even death. Unless your insurance carrier included a comprehensive Communicable Disease Exclusion, your organization should have coverage to protect your organization from a claim alleging that a 3rd party was infected by COVID-19 due to your operations.
Directors & Officers Liability: A Directors & Officers Liability Policy will typically have a bodily injury exclusion since this policy is designed to insure economic loss, but there is also a risk of shareholder litigation alleging the decrease of your organization’s stock price resulting from your Board failing to develop adequate pandemic contingency plans or failing to observe infectious disease protocols. Your Graham Company Claims Consultant will advocate on your behalf if there is potential to make an argument for coverage for your Directors & Officers.
Political Risk or Supply Chain Disruption Insurance: Political Risk or Supply Chain Distribution Insurance may include coverage for business interruption loss. Policy forms vary but some provide coverage for loss resulting from regulatory action of a foreign government disrupting production, even though there was no physical damage from COVID-19 to the foreign location.
Pollution Legal Liability “Disinfection Costs” Insurance: If your organization purchased Pollution Legal Liability Insurance regarding Pollution events that occur at your locations, coverage for “disinfection costs” may be included to disinfect the presence of COVID-19.
Crisis Management & Reputational Damage: If your organization is impacted by COVID-19 and needs to respond to the media, your Umbrella Policy may also include coverage which provides access to Media Specialists to help ensure your response restores confidence to protect your organization’s reputation.
The scope of insurance coverage related to COVID-19 may be dependent on the specific facts of a claim and your Graham Service Team is available to assist you in understanding and maximizing the insurance protection for your organization.
HEALTH INSURANCE REVIEW
Below is a review on how Health Insurance coverage will typically respond to COVID-19:
- Fully insured plans under traditional managed care programs are covering COVID-19 testing at 100% when recommended by a medical professional. Standard cost-sharing may apply for the treatment of COVID-19.
- The IRS issued a notice on March 11th allowing High Deductible Health Plans (HDHP) to cover COVID-19 testing and treatment pre-deductible without losing their HDHP status or favorable tax-treatment status for Health Savings Accounts (HSA).
- Self-funded plans have the option to cover COVID-19 testing and treatment with no member cost-sharing. If you are interested in adding this benefit, please contact your third party administrator.
- If telemedicine is available, participants are encouraged to use telemedicine services and in many cases, cost-sharing on these visits are waived for a specified period of time. Some carriers also have 24/7 access to licensed nurses who can assess and assist participants with symptoms at no cost.
- Many carriers are increasing access to prescription medications and/or temporarily lifting restrictions for maintenance medications for participants in states that have declared a state of emergency due to the virus. Participants should call the customer service number on the back of their ID cards if they require additional medication refills due to a potential quarantine situation.
Life Insurance/Accidental Death & Dismemberment Insurance
- Group life insurance policies do not have policy provisions that would limit a claim payment resulting from COVID-19 provided all other requirements are met. Each claim will be reviewed consistent with policy terms and applicable insurance law.
- Disease-related deaths are typically excluded under Accidental Death & Dismemberment (AD&D) products.
Group Disability Insurance
- Claims for COVID-19 will be evaluated the same as any other illness. As with all claims they must satisfy the definition of a disability. Each claim will be reviewed consistent with policy terms and applicable insurance law.
- Employees under quarantine for COVID-19 that do not have a disabling medical condition are not considered disabled solely due to being quarantined. Employees in quarantine will be evaluated against the terms and conditions of their policy or plan similar to any other confirmed sickness or illness. Some carriers may also offer a Quarantine Rider if certain conditions are met.
- Employees who have a confirmed diagnosis of COVID-19 and who are under quarantine, will be evaluated against the terms and conditions of their policy or plan similar to any other confirmed sickness or illness.
Employee Assistance Programs (EAP)
- Most EAPs are extending telephonic support to employees and dependents who are feeling overwhelmed or anxious about COVID-19. EAP providers have access to a broad range of resources and services.
The scope of insurance coverage related to COVID-19 may be dependent on the specific facts of a claim and your Graham Benefits Service Team is available to assist you with any additional questions.