The global spread of the coronavirus is becoming a growing concern here in the U.S. that not only threatens the health and wellbeing of the general population, but is also having a significant impact on the economy and businesses. In Seattle, one of the hotspots for the virus, business owners are already describing the city as a “ghost town,” and major gatherings have been canceled, such as SXSW in Austin, Texas, and many other conferences and events nationwide, leading to millions in losses for major companies and their employees, local businesses and government organizations. (Ed. note: On March 11, the World Health Organization officially declared the coronavirus outbreak to be a global pandemic.)
For facilities managers preparing for how this pandemic will impact revenue and business operations, start by analyzing how your current insurance policies might provide coverage for any losses incurred. Because an insurance policy is a bilateral contract, understanding your policy prior to contacting your insurance carrier is the best practice. Keep in mind that you as the policy holder or “assured” may be financially responsible to remedy any problems regardless of coverage, or even potentially be completely dropped from coverage due to risk.
When you do speak with your insurance carrier about the potential impact of the coronavirus on your property, here are five critical questions to ask:
1. Is COVID-19 (coronavirus) covered within my business owner’s insurance policy?
Most commercial property insurance policies are a form of CP 10-10/30, which carries a general exclusion for loss due to virus or bacteria. Larger asset portfolios may carry broader coverage. Prior to contacting your agent or carrier about your policy coverage, first consult with an insurance policy expert. Why? An insurance agent carries a fiduciary responsibility to the insurer as the client, not you as the consumer. They will likely document any notice, which could ultimately end up hurting your business.
And what if you have an event that is cancelled? Even if you have purchased event cancellation insurance, those policies insure against curtailment, postponement and cancellation of events due to adverse weather and other risks. Exclusions exist for any communicable disease. There are however, parameters that define communicable diseases that may lend itself to coverage, or endorsements that remove the exclusion all together. It’s best to contact a policy expert and your broker.
2. What precautions can I take to prevent potential contamination of coronavirus within my asset?
Have an IICRC-certified mitigation company schedule a complete sanitation and sterilization of your complex. This may be very expensive, but certainly less expensive than a quarantined building.
What type of products can be used for mitigation or sterilization to prevent potential contamination? Very few products are known to be a “guaranteed kill” but they do exist. “Botanical Disinfectant Solution” is one effective product, and several brand-name products, such as Lysol and Clorox, are also recommended. (See a complete list of approved products here.)
3. If someone who has been in our building tests positive for COVID-19, what can we do?
At this point, you need to provide notice to your insurance carrier and put a strategy in place for mass communication of emergency mitigation and restoration. You must also promptly notify your city and local government as well as the governing bodies of the CDC and EPA.
4. If a claim has been filed and accepted on my affected property, should I use preferred vendors from the insurance company?
In emergency-specific cases like this, the answer is yes. By using a preferred vendor, certain boxes have already been checked, including but not limited to liability insurance, warranties of work and licensure/certifications, and costs are generally pre-negotiated. You should absolutely also hire your own 3rd-party project manager to oversee the process, clerk the project and document progress.
5. If my business is shut down due to enforcement of civil authority, can I file a claim for business interruption or loss of use?
In almost all cases, the short answer is no. Civil authority and mandatory shut down of your property is more often excluded than covered, though it’s always advisable to review your policy first.
If early results are any indication, the widespread health and economic impact of the coronavirus is only just beginning. It’s wise for property managers to take action now by assessing the potential risks to their assets, understanding what their insurance policies really cover and communicating with their insurance carriers about coverage in order to proactively plan for losses before they occur.
Michael A. Fried is president, Aftermath Consulting Group, LLC, a global consulting and expert witness firm.
