COVID-19 ARE YOU REALLY INSURED?

No one would have suspected that a pandemic would unite the world at the start of a new decade. This is exactly what one virus has done. The result of COVID-19 impacts all businesses, social interactions, races, genders and nationalities. It is truly non-discriminatory.

This virus has spread so swiftly that it has not given any industry or person the opportunity to consider all its impacts on society or on the economy. We are living in a brave new world.

Many of us have some form of (personal and business) insurance. What needs to be considered is whether our insurance policies will cover the fallout from the pandemic and, even more importantly, whether insurers are planning to extend cover until this virus is defeated/ controlled?

Some insurance considerations for policyholders

You have a business interruption policy. If you close your business for a couple of weeks, will you be covered?

Business interruption insurance usually covers interference with a business as a consequence of damage due to fire, a natural disaster (storm, wind, lightning, earthquake, etc.) and may exclude infectious diseases. Yes, our President has declared this pandemic a state of disaster but this does not mean that your policy will provide cover. 

So you need to keep trading, how do you limit your liability?

Generally, a public liability policy covers instances where you would be legally liable to pay in the event that your customers become ill in the course of, or in connection with, your business.

This requires you to have taken all reasonable steps and precautions to prevent accidents or losses. So for example if you know that members of your staff have COVID-19 and you insist that they come to work, and they spread the disease to customers, you will not have cover. Therefore, make sure you have adequate human resources and business continuity policies to deal with this.

This principle will be equally applied if you are insured for employer’s liability cover. Directors may also not have any protection under directors’ and officers’ liability cover if they can be shown to have failed to observe protocols.

Further, some policies do not cover directors where their actions relate to a non-insurable event. COVID-19 could be considered by some insurers to be ‘uninsurable’.

Are the lives of your employees covered?

Where employers have provided group life cover to their full-time permanent employees, a death caused by COVID-19, is likely to be covered depending on whether the policy does not exclude certain diseases.

The same is applicable to an individual life policy.

Does SASRIA cover this?

SASRIA does not cover this pandemic, unless the loss was caused due to a riot, civil unrest etc.

What do you need to do?

Contact your broker and check whether your policy would extend to business interruption related to COVID-19.  Some policies will pay out if a business is forced to shut down because a public authority imposes this condition. However, in South Africa a shut-down has not been imposed on any business; our President has instead asked citizens to act responsibly and exercise measures to prevent spreading the diseases. This may mean, as an example, you would need to allow your employees to work from home.

In addition, in response to the Ebola epidemic in October 2014, specialty brokers in conjunction with the Ark Specialty Program of Lloyd’s offered a new type of coverage called ‘Pandemic Disease Business Interruption Insurance’  to cover the loss of income arising from government-mandated closure of health care facilities and diminished revenue in the aftermath of a quarantine. Cover was also developed for SARS (2003), Swine Flu (2009), and Zika (2016), but it does not appear that there is currently any similar cover for COVID-19.

Stay calm, act reasonably, practically and be prudent. Consult with your broker and undertake a risk assessment of your business. Your broker can check with your insurer if the insurer is willing to extend cover (this will be at cost). Consider measures to limit your liability and risk. Consult with attorneys to advise you from a legal perspective where your risks lie, and how you can mitigate them.

Above all remember that now is the time for us all to stand together.