New: Reopening safely means keeping employees, customers and suppliers safe and ultimately...staying open. Check out some helpful information from Travelers Insurance.
This is truly an unprecedented time in our country, as we all cope with the spread of the COVID-19 virus. We at Salerno Brokerage hope that you are safe and healthy during this trying time.
While everyone is facing myriad issues related to COVID-19, we want to provide our clients with some information specific to the virus and insurance coverage.
Business interruption
Salerno Brokerage has received a number of inquiries from business owners regarding possible insurance coverage under the "Business Interruption" portion of insurance policies that contain that particular insurance coverage as a result of loss of business from the COVID-19 crisis.
Unfortunately, due to near-universal provisions and exclusions in policies applicable to business interruption insurance coverage, losses incurred from the COVID-19 crisis are unlikely to be covered. Typically, business interruption insurance coverage must be triggered by direct physical damage to covered property when caused by a covered peril such as a fire or wind. In most cases, the COVID-19 virus will not cause damage to covered property. And, even if it did, standard policies have language that excludes "loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease."
Civil authority
The same physical damage requirements apply to coverages for any civil authority prohibiting access to your business. So once again, a loss due to COVID-19 would not be covered.
General liability
Another potential claim scenario can occur if a business is held liable for someone's illness under some theory of negligence. Liability might be imposed for remaining open after an order is given by a civil authority, allowing a known infected employee to serve customers or failing to adhere to the Centers for Disease Control and Prevention guidelines. If sued and, absent a communicable disease exclusion endorsement (often attached to policies), the commercial general liability policy may respond. However, the illness must result from an occurrence (i.e., accident) and the allegation must overcome the "expected or intended injury" exclusion.
Workers' compensation
With regard to WC, in most cases, COVID-19 is no more occupational than the flu unless your occupation makes you particularly susceptible to exposure (such as a health care worker).
Event cancellation
Insurance purchased for the recovery of expenses and lost revenue from the cancellation of an event (such as, a convention, business meeting, concert, festival, trade show, etc.) are written with nonstandard terms, so each policy will need to be reviewed for its applicable coverage.
Travel
Travel insurance won't protect travelers who cancel because they are worried about the COVID-19, but it should cover a traveler who contracts the illness.
Salerno Brokerage strives to provide our clients with the best service possible. Unfortunately in this case, that means having to share this news with you. We wish we could provide better news. As a small business, we share the same concerns for our families and our employees.
Despite the above, Salerno Brokerage is working closely with the insurance industry to try to find a solution. We are keeping our finger on the pulse of not only the insurance industry, but also legislative and regulatory initiatives that may provide relief to small businesses. As things develop and more information emerges, we will strive to keep you informed.
We wish you all the best. Please stay healthy and, of course, do not hesitate to contact us should you have any questions.
Applicable to New York State Small Businesses (any business that is resident in New York State, is independently owned and operated, and employs 100 or fewer individuals) insured by a licensed New York State Insurance Company) and New York State Personal Insurance Policies:
Billing Changes
A recent Executive Order issued by Governor Cuomo, together with recent amendments to the insurance and banking regulations (the "regulations") issued by the New York State Department of Financial Services ("Department"), extend grace periods and give you other rights under certain property/casualty insurance and life insurance policies as well as annuity contracts. If you are an individual or small business and can demonstrate financial hardship as a result of the novel coronavirus ("COVID-19") pandemic ("affected policyholder"). These grace periods and rights are currently in effect but are temporary, though they may be extended further. Please check the Department's website at www.dfs.ny.gov for updates.
If you are an individual, generally, personal lines property/casualty insurance policies are covered by these amendments, including auto, homeowners' and renters' insurance.
If you are a small business, only certain types of commercial lines property/casualty insurance policies are covered by these amendments, generally including property, fire, commercial general liability, special multi peril, medical malpractice, workers' compensation, commercial auto (including livery and other for-hire vehicles), and commercial umbrella insurance. A business qualifies as a "small business" if it is resident in New York State, is independently owned and operated, and employs 100 or fewer individuals. There are similar but slightly different amendments related to life insurance policies and annuity contracts.
Moratorium on cancellation, non-renewal and conditional renewal (not including life insurance or annuity contracts)
If you are an affected policyholder, there is a moratorium on your insurer cancelling, non-renewing, or conditionally renewing your property/casualty insurance policy for a period of 60 days. If you do not make a timely premium payment and can demonstrate financial hardship as a result of the COVID-19 pandemic, your insurer may not impose any late fees relating to the premium payment or report you to a credit reporting agency or a debt collection agency regarding such premium payment.
Insurance payments—grace period for life insurance policies and annuity contracts
If you can demonstrate financial hardship as a result of the COVID-19 pandemic, your insurer must extend to 90 days the applicable grace period for the payment of premiums and fees under your life insurance policy or annuity contract. If you do not make a timely premium payment and can demonstrate financial hardship as a result of the COVID-19 pandemic, your insurer may not impose any late fees relating to the premium payment or report you to a credit reporting agency or a debt collection agency regarding such premium payment.
Catching up on overdue insurance payments
The regulations also require your insurer to permit you, as an affected policyholder, to pay the overdue premium over a 12-month period if you did not make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic and can still demonstrate financial hardship as a result of the COVID-19 pandemic. This also applies if the insurer sent you a nonpayment cancellation notice prior to March 29, 2020.
Policies financed by premium Finance Agencies—grace period
If your insurance policy has been financed through a premium finance agency, and you, as an affected policyholder, do not make an installment payment, the premium finance agency may not cancel your policy for a period of at least 60 days for property and casualty insurance, 90 days for life insurance and annuities, including any contractual grace period, and subject to the safety and soundness of the premium finance agency. In addition, if you do not make a timely installment payment to the premium finance agency, the premium finance agency must extend the due date for the installment payment by at least 60 days for property and casualty insurance, 90 days for life insurance and annuities, and may not impose any late fees relating to that installment payment and may not report you to a credit reporting agency or a debt collection agency regarding that installment payment.
Catching up on overdue payments to premium finance agencies
If you, as an affected policyholder, do not make a timely installment payment to the premium finance agency due to financial hardship as a result of the COVID-19 pandemic, the premium finance agency must permit you to pay the installment payment over a 12-month period if you can still demonstrate financial hardship as a result of the COVID-19 pandemic, subject to the safety and soundness of the premium finance agency. This also applies if the premium finance agency issued a non-payment cancellation notice prior to March 29, 2020.
How to demonstrate financial hardship
If you, as an affected policyholder, are unable to make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic, you may submit to your insurer or premium finance agency, as applicable, a statement that you swear or affirm in writing under penalty of perjury that you are experiencing financial hardship as a result of the COVID-19 pandemic, which the insurer or premium finance agency, as applicable, shall accept as satisfactory proof. Such statement is not required to be notarized.
For more information on the changes and for updates, please visit our website.
If you have any questions regarding your rights under the Executive Order or regulations, please contact us.
Policyholders in States Other than New York - Please contact our office for specific changes applicable to your state.
