A Covid-19 insurance primer for businesses

With ongoing government actions in response to the Covid-19 pandemic, insurance policies should be reviewed carefully to ensure employers have coverage. In some areas, there have been significant developments over the past year.

As we’ve struggled to battle the Covid-19 pandemic, much has happened in the insurance sector affecting you and your business. Here are the most significant developments.

Health insurance   

The health insurance industry has moved quickly in collaboration with providers and regulators to make Covid-19 testing and treatment as seamless as systems allow, including these general guides:

• No deductibles or co-pays or other cost-sharing for Covid-19 testing.
• No deductible or co-pays for treatment of Covid-19 through certain dates.
• No prior authorizations for testing/treatment required, in some cases through certain dates.

As the Covid-19 vaccine supply rapidly expands, priority age bands disappear and more registrations become available, health insurance providers have increasingly focused their Covid-19 actions on improving vaccine acceptance and access. So go ahead and get your jab!

Another very positive development has been the deployment and adoption of telemedicine or telehealth. Health insurance providers have been paying for these services provided by various physical and mental health practitioners generally on the same terms and conditions and at the same amount as if the service had been provided in person.

Insurers, the healthcare sector and regulators, and most importantly the consumers have uniformly celebrated the success of telehealth if not sometimes disagreed over the implementation of some of the financial and other terms of its delivery.

When returning to the “normalcy” we all desire yet experience difficulty defining in these changing times, it seems clear that telemedicine is here to stay in likely the same fashion and degree as “working from home or anywhere” will be a permanent part of our economy.

New twists on telemedicine have recently been announced by no less than Amazon and now CVS — the latter of which reportedly is combining virtual and in-person mental health capacity to assess and refer patients for specialized treatment. A New Hampshire observer would justifiably note that it is not the platform that is missing from treating those worsened mental health struggles but the lack of credentialed professionals.

General liability, business owner policies and directors & officers policies

Generally speaking, general liability covers obligations for bodily injury and property damage, so there could be third-party liability coverage if there are bodily injury claims resulting from exposure to Covid-19. Some packages (general liability and property) provide some business interruption insurance coverage. There are both commercial multi-peril property policies and business owner policies that provide coverage for business interruption.

There may also be endorsements that extend the coverage on an existing policy (and there are separate policies that provide business interruption insurance coverage as well).

If your business and you are sued, there may be coverage under your general liability or other policy. However, some policies may have exclusions for losses resulting from epidemics or pandemics. In short, you need to carefully review and study your policies.

Directors and officers policies cover claims arising out of the discharge of their respective duties or failure to carry out such duties. Hopefully, you have already taken all reasonable and prudent steps with respect to responding to the risks associated with Covid-19. If not, you should immediately do so by following the guidance of the Centers for Disease Control and the state’s public health agencies.

Lawmakers in Washington and Concord have proposed and debated various employer liability protections cheered on by the national and local business lobbies. New Hampshire’s primary effort is SB 63, which has been largely designed and spearheaded by the Business and Industry Association (BIA). The BIA is trying to establish a “safe legal harbor” for employers who studiously follow federal and state public health and safety Covid-19 guidelines to protect them from lawsuits by employees and customers who have contracted the disease. The lawsuits would be difficult to establish but nevertheless expensive to defend.

Business interruption insurance/civil authority

Business interruption insurance is not as simple as many business executives and owners suspect. The policies generally provide coverage for circumstances within the meaning of the policy language that cause an interruption in business.  Usually, they require physical damage to the business location or property, and there may be exclusions for viral infections like Covid-19.

However, there is much discussion among legislators and activity among trial lawyers to force insurers to pay claims irrespective of exclusions and whether the policy would actually pay the claim.  This is the case without regard to the fact that there was no underwriting or premium collected for the risk. Organized and professional efforts to achieve this result are mobilizing throughout the country, ensuring costly litigation for years to come.

You can learn more details about business interruption insurance in its various forms from the New Hampshire Insurance Department’s FAQ page.

There is also likely some coverage for “civil authority” in your policies. The government shuttered businesses that weren’t declared “essential.” In short, the government via fiat put you out of business — at least temporarily.  The issue to overcome will be the requirement of actual, physical loss.

Professors Jill Bisco, Stephen Fier and David Pooser write in the NAIC’s Journal of Insurance Regulation that aside from whether the actual terms of business interruption insurance policies actually provide coverage, the most significant risk facing insurers is “uncertainty regarding government-required retroactive coverage.”

Said another way, an employer’s best shot at protection may be the government’s willingness to require insurers to pay irrespective of what the insurance contract says.

That does not mean that lawsuits won’t be filed. In some cases, they likely should be filed depending on the policy and particular circumstances. Reportedly, over 1,250 such lawsuits had been filed as early as last fall. Nearly one-third were brought by the restaurant and drinking establishment industry. One recent case brought by Caesars Entertainment (think casinos) is a business interruption insurance suit seeking $2 billion in damages from 35 insurers and dozens of Lloyd’s underwriters, according to the insurance sector media. I guess we will learn whether you can actually win against the house.

Workers’ compensation

As a long-term officer of a workers’ compensation insurer, at the onset of the pandemic, I initially provided only the National Association of Insurance Commissioners

(NAIC) guidance:

Workers’ compensation insurance covers work-related injury or illness — either sustained on business premises or due to business operations. Typically, workers’ compensation covers the employee’s medical expenses, rehabilitation costs and at least some portion of their lost wages.  Workers’ compensation policies typically cover only occupational diseases, which are diseases that are unique or peculiar to one’s job. Ordinary diseases of life are not covered. Covid-19 may be covered in certain limited circumstances, depending on how the individual contracted it, their occupation and the specific policy.

Since the NAIC’s guidance, a lot has happened in the workers’ compensation insurance world. During 2020, statehouses across the country introduced and debated compensability presumption legislation for different categories of “essential” employees should they contract Covid-19.

A compensability presumption law “assumes” that the employee contracted the disease at work. Whether the injury arose “in the course of employment” is a fundamental question of whether a claim is compensable under workers’ compensation law and insurance policies. First responders, fire, police, safety, EMTs, Emergency Room personnel, healthcare workers and others are easily seen why legislative bodies would want to create a compensability presumption in their favor during the course of the nation’s worse health crisis in a century. Grocery store and other retail workers and delivery drivers may also warrant special consideration.

However, the definition of “essential” gets stretched across the country in various bills, some of which are beyond the bizarre. Telemedicine reimbursement for employee treatment, immigration status, screening and testing, survivor benefit enhancement, exclusion of Covid-19 losses from premium calculation and non-cancellation, non-renewal and employee code reclassification have all been reviewed, and depending on the state, adjusted by the insurance regulator or legislature during the pandemic.

Some 20 states have adopted some version of the “essential” employee compensability presumption law. This year, new concepts are being introduced and debated. The National Council on Compensation Insurance recently reported that at least a dozen states are reviewing legislation that would expand compensability presumption laws for infectious diseases and pandemics beyond Covid-19.

Life insurance

God willing you have not had to deal with life insurance issues in your personal or commercial life as the result of the pandemic. Obviously, group and individual coverage can be impacted based on the position of the deceased.

In closing, as the New Hampshire Insurance Department says:  Insurance is complex. Your policies need to be carefully reviewed.  While many policies seem the same, the differences, as well as governments’ actions, will determine whether or not your business is covered.

Attorney Donald J. Pfundstein is a shareholder and director of the Concord-based firm of Gallagher, Callahan & Gartrell. His practice focuses on regulated industries.