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Loss of Income in the Equine Industry

The COVID-19 Impact: Can my insurance help?

As we continue to see widespread effects relative to COVID-19, we are closely monitoring and gathering information to assist our clients. We will strive to keep you posted as any changes occur in the insurance landscape.

The nature and magnitude of claims related to COVID-19 and its financial impact are not yet known, but, in most scenarios, equine businesses will be challenged to find coverage for losses stemming from this pandemic. This blog is intended to be a general description of coverages currently utilized by our industry and how associated policies may respond to COVID-19 claims. We recommend you review your own specific policy and any attached endorsements, and reach out to your agent with any questions.

Under Business Income coverage, companies are reimbursed for loss of income due to a temporary suspension of normal operations that stem from damage to their physical property. Typically, in order for business income coverage to trigger on a policy, there must be an underlying covered cause of loss. This means a fire, windstorm, hail or other similar type of event would have to occur. Most forms require actual property damage to trigger coverage. Viruses and diseases are normally not insured perils, and, therefore, income reimbursement would not be available under this coverage.

Civil Authority is a policy provision that may reimburse for lost income and extra expense due to a government entity denying access to a covered commercial property. For this coverage to apply, the civil authority’s action must be taken in response to direct physical loss of or damage to property. This requirement is not met if the action of the civil authority is taken to prevent the spread of a virus or disease.

SIDE NOTE: Most carriers have advised that they are not currently making changes to policy forms regarding business income. Recently, Insurance Services Office (an advisory and rating organization for property/casualty insurance) created two business income endorsements as a specific response to COVID-19. Both would serve to broaden language within the contract and allow for coverage, in limited form, for certain Civil Authority orders relating to this coronavirus. Carriers will need to approve and rate these forms before such coverage can be offered to clients.

Workers’ Compensation claims may arise from employees contracting COVID-19 during their employment. Workers Compensation coverage would depend on the jurisdiction and the claims scenario, and circumstances regarding any alleged workplace exposure would need to be investigated.

As with any ordinary virus or disease, if it is a condition that the general public is equally exposed to, Workers' Compensation would likely NOT apply. However, if the employee could prove that their job put them at greater risk than the general public of contracting COVID-19, some jurisdictions may grant coverage. An employee would likely need to be able to prove that they came in contact with the virus while working for the business in order to establish compensability.

Emotional anguish or stress is another issue altogether, and one that may need to be addressed in future Workers’ Compensation claims.

Commercial General Liability policies may respond in a situation where an individual alleges they were infected with COVID-19 while on the insured’s property. The burden of proof would be with the injured party to prove causation and any associated damages.

Directors and Officers policies may provide coverage for the costs and liabilities arising from lawsuits alleging that the company or association failed to act reasonably and plan appropriately in response to the coronavirus.

Employment Practices liability policies may respond if claims are submitted as a result of sick leave and other human resource-related policies associated with the company’s coronavirus response plan.

Event Cancellation policies typically exclude disease or virus causes, so coverage will most likely not be available for this specialty offering.

Remember, your issued policy determines actual coverage and any exclusion. We urge you to carefully read your entire policy (including any attached endorsements), maintain all your financial records and reach out to your agent with any questions. A wise policyholder is an educated one. Stay healthy!

For more information about COVID-19 please visit https://www.cdc.gov/coronavirus/2019-ncov/index.html

For any questions regarding this blog, please contact us direct at: Equidae Insurance, Inc. 608 Virginia Street East, Suite 302 Charleston, WV 25301 p. (304) 346-1198 f. (304) 345-3535

Stacey Halloran, Agent
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