Pandemic presents challenges to finances, loans, insurance coverageMay 29, 2020
An excerpt from article by Katie Nussbaum on Savannah Now.
Along with new daily routines that include social distancing and personal protective equipment, such as masks and gloves, the COVID-19 pandemic has also presented a new challenge for both business owners and individuals when it comes to retirement finances, navigating new loan programs, such as the Paycheck Protection Program (PPP) and insurance coverage.
“We’re accustomed to exiting disasters. A hurricane hits, a fire burns, there’s a definite end to the disaster and then there’s what I call the exit and reconciliation, which is the rebuilding phase. You don’t have to rebuild your house while the hurricane is still hitting you and that’s what’s different about this,” said David Paddison, president of Savannah’s Sterling Seacrest Partners Inc., a privately held insurance brokerage and employee-benefits consulting firm.
Recently Paddison and Wright spoke to the Savannah Morning News to answer some questions surrounding changes the pandemic has brought to the world of insurance, PPP funding and personal finances.
Question: I didn’t have business interruption insurance before the pandemic, should I look at adding it to my policy now? Will it cover things like this in the future?
Paddison: “Business interruption is like a disability policy for your business and depending on your circumstances can be a very important cornerstone of a comprehensive risk management program, but it’s one of the most complicated coverages to understand and to purchase.
“It’s not a one-size-fits-all. You buy a car and you get car insurance, even though there’s some variability there, you crash the car, they pay for the car. In business interruption every industry has very different exposures to interruption.
“We have seen very, very limited instances where there is specific coverage that has been negotiated for and paid for a pandemic.”
Question: Will a business income policy or business interruption insurance protect my business if I was forced to close or made the decision to close on my own?
Paddison: “Business interruption is not a plain vanilla contract and it varies by insurance company, by industry, by state and so it depends on what you purchased. In most cases the pandemic is considered to be not a trigger by the insurance industry, but since it’s something that no one understood or expected, it’s being debated by the legislature and the courts, and so we don’t really know where it’s going to end up. Our advice to our clients is, if you think you’ve suffered a loss and it’s potentially covered under your policy, let’s go ahead and file a claim and see how the situation evolves, because ultimately it’s going to be up to the states and the legislature and the regulators to figure out how this thing winds up.
“The traditional business interruption scenario is where you’ve suffered physical damage to the premises where you’ve had a fire, tornado or a hurricane, but there are as I mentioned before there are very specific ways you can tailor your coverage to pick up additional sources of interruption.”
Question: I’ve reopened my business, what steps can I take to ensure employees and customers are safe and following protocols and limit my liability?
Paddison: “We’ve got customers all over the country and every state is different, so the first thing we’re advising people to do is follow their state health department guidelines, the second thing they need to do is follow the (Centers for Disease Control and Prevention) guidelines, and the third piece since it’s involving employees is there’s also Occupational Safety and Health Administration workplace guidelines related to this. You’ve got your state, federal and workplace guidelines that need to be followed. Those are evolving as we learn more about the virus.”
Question: A customer or employee claims that they contracted the virus at my place of business. Am I liable?
Paddison: “The liability is going to be determined by the court of law, but the coverage by a lawsuit related to that in a general liability sense, is you’re going to have coverage to defend you and then it’s going to be up to the plaintiff to prove that your business practices or negligence led to their infection. Whether you become liable for that infection or not is really tricky because it’s hard to pinpoint with this particular disease where you got it. We anticipate there is going to be litigation related to it and that is absolutely something everybody needs to meet with their insurance adviser and talk about their protocols and how does this affect my coverage and then go from there.”