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Gulfshore Insurance Coronavirus Update #3: What Employers Need to Know About Their Business & COVID-19As the situation surrounding COVID-19 keeps changing, Gulfshore Insurance is working hard to keep you updated on how it may impact your business. Here are five important updates that business owners need to know.

  1. Florida Small Business Emergency Bridge Loan Program – Businesses with fewer than 100 employees that are located in Florida and are affected by COVID-19 can apply for an emergency bridge loan from the State of Florida. Loans are up to $50,000 (and up to $100,000 in special circumstances) and are interest-free for up to one year. The Florida Department of Economic Opportunity (DEO) administers these loans and will work with every borrower to ensure that repayment of the loan isn’t an overwhelming burden. To be eligible, a business must have been established prior to March 9, 2020, and demonstrate economic impacts as a result of COVID-19. The application period ends May 8, 2020.
  2. U.S. Small Business Administration Disaster Loan Assistance – The U.S. Small Business Administration’s (SBA) low-interest Economic Injury Disaster Loans (EIDLs) are now available to small businesses affected by the loss of revenue due to the Coronavirus that are unable to pay ordinary operating expenses. These loans are intended to provide working capital to help small businesses until normal operations resume. For more information or to apply for a loan, contact the SBA at www.sba.gov/disaster.
  3. New Paid Leave Requirement for Employees Affected by COVID-19 – A new federal law that was approved on March 20, 2020 requiring employers with fewer than 500 employees to provide paid leave for their employees in certain situations. This new law goes into effect April 2, 2020 and will end on December 31, 2020. It is possible we may see some type of exemption from the new paid leave requirement for small businesses with fewer than 50 employees, but that has not happened yet.
  4.  A New Poster Will be Required for Businesses – The new paid leave law requires all employers to provide a notice/poster to their employees explaining the new paid time off that they may be eligible for as a result of COVID-19. It is expected that the U.S. Department of Labor will publish this poster very soon.
  5. Laid-Off Employees Can Apply for Unemployment Compensation – Small businesses who have had to lay employees off due to a business closure because of COVID-19 can advise their employees to apply for unemployment compensation (also called ‘reemployment assistance’). Currently, out-of-work employees can get up to $275 a week for up to 12 weeks. The United States Congress is currently debating a law that would increase these benefits and also expand who can file for unemployment benefits (i.e., independent contractors).

The situation surrounding COVID-19 is changing every day, but Gulfshore Insurance is working hard to keep you updated on how it impacts your business. If you have any questions, please let us know.

Although the health and safety of our community is our number one priority during the COVID-19 outbreak, there are many concerns surrounding the degree and duration of disruptions to business activity and daily life. Mandatory and voluntary quarantines, social distancing to groups of 10 or less, restricted travel, and business closures are increasing measures being taken around the United States. These disruptions primarily affect businesses as they begin to lose inventory, revenue, and profit. From mom and pop shops, to tourism hot spots, concert venues, and restaurants the impact will be felt by all. Not to mention that this rippling affect will then be felt by suppliers, contractors, vendors, and service providers.

For insureds and insurers, once-hypothetical questions surrounding COVID-19 are quickly turning to familiar and regular insurance coverage questions such as the availability, scope and limitations of coverage, number of occurrences, exclusions, along with limits, sub-limits, deductibles and retentions. The claims that come out of COVID-19 will also provoke unique question and present their own set of challenges.

First-Party Business Interruption Coverage

First-party policies covering commercial property insurance provide coverage for business income loss by adding an endorsement to the insured’s property policy. This endorsement is designed to protect the insured for losses of business income it sustains as a result of direct loss, damage, or destruction to insured property by a covered peril. Although many such clauses are in use today, a typical business income insurance clause reads as follows:

“We will pay for the actual loss of business income you sustain due to the necessary suspension of your ‘operations’ during the period of ‘restoration.’ The suspension must be caused by the direct physical loss, damage, or destruction to property. The loss or damage must be caused by or result from a covered cause of loss.”

Physical Loss or Damage Requirement

BI coverage is often part of the commercial property policy a business holds. This form adds coverage, in certain instances, for lost business income, contingent business interruption losses, and losses due to certain action taken by civil authorities.

To obtain coverage resulting from the current COVID-19 crisis, the existence of the virus would need to constitute a Covered Cause of Loss, which results in physical loss of or damage to the covered property. This is unlike a fire, hurricane, or flood, which are common causes of losses that cause visible damage to property. As mentioned earlier, businesses are closing, even though there may be no apparent damage at all. But, if the coronavirus is found within the confines of a workplace or business, this arguably constitutes damage to the property, albeit at a microscopic level that cannot be seen.

Duration of Lost Income Claim

Each policy is unique with different definitions and measurements relevant to the period of restoration. Complications can also arise where an insured opts not to resume business operations. However, business interruption typically includes coverage for repair or replacement of property impacted, in addition to loss of business income through the date the damaged property is repaired or replaced.

Calculation and Adjustment of Accepted Claims

Unfortunately, insureds bear the burden of substantiating claimed BI losses. When a claim is being reported, it’s important for the insured to detail and retain documentation for all business activity, direct or indirect cause of any disruptions, and mitigation efforts. It’s also important to note that insureds should be able to value and substantiate losses by referencing business history, benchmarks, and forecasts.

If you have BI coverage on your policy and find yourself needing to temporarily close your doors, we recommend you file the claim with your insurance company. If you are usure if you have this coverage, I am more than happy to review your policy. At Gulfshore Insurance, we specialize in insurance and risk management for the restaurant industry and can answer any questions you may have.

 

 

Businesses are just now starting to feel the effects of the coronavirus, COVID-19. Surely, these effects locally and on the economy at large will be felt for years to come. Churches and non-profits are having services and events cancelled or moved to livestream, and there is a slow-down of all other in-person gatherings. How this will impact the administrative and financial health, it’s way too early to tell.  Will tithes and donations drop off because the building isn’t open for services? Will members curtail their giving because they’re spending in other areas or perhaps their financial livelihood has been affected?  If donations are significantly reduced as an effect of the coronavirus, is there insurance coverage for that? If staff, members or guests contract the virus at our facilities is our organization liable?

Loss of Revenue
Loss of revenue or “Business Income (BI)” is a coverage that typically falls under the Commercial Property Insurance policy.  However, for a claim to be paid, we must carefully consult the policy language. All property policies vary in coverage, limits, triggers and exclusions, so organizations should review their specific policy before filing a claim or expecting a BI loss to be paid. That being said, the majority of all commercial property policies have both specific exclusions and coverage limitations on BI claims from viruses and “civil authority” actions.

Under most policies, an exclusion of loss due to virus or bacteria is included on the policy.  The most common exclusion, which many insurance carriers apply, comes from the widely used Insurance Services Office (ISO) form CP 01 40, and it specifically states:

“there is no coverage under such insurance for loss or damage caused by or resulting from virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.  The exclusion in this endorsement applies to all coverages provided by your Commercial Property insurance, including (if any) property damage and business income coverages.”

You may be thinking, however, the virus doesn’t cause any damage, it’s the state or federal government recommending, or in some cases requiring, a quarantine that’s affecting the income stream.  That too is contemplated in the insurance policy. While many property forms can vary, we’ll look at the “Civil Authority” coverage in the industry standard ISO form, CP 00 30.  This forms states:

“We will pay for the actual loss of business income you sustain and necessary extra expense caused by action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than at the described premises, caused by or resulting from any covered cause of loss.”

Most BI coverage in the commercial property cause of loss form will include “Civil Authority” as a covered cause of loss, but while it is providing coverage, it is simultaneously limiting the coverage to a specific type of event.  As we can see, the coverage requires a “direct physical loss or damage to property” and requires a “covered cause of loss.”  For example, after Hurricane Irma, many roads were impassable and the local authorities restricted traffic.  When businesses lost income because the authorities restricted traffic and affectively quarantined an area, there was insurance coverage.  The coverage was triggered by a physical, wind damage loss to trees or power lines, even though it’s wasn’t on our property.  In the case of coronavirus, the loss of income isn’t due to physical damage and isn’t due to a covered loss (because viruses are excluded).

Workers’ Compensation claims for COVID-19
It is possible that some organizations will have employees incur medical expenses or lost wages due to a COVID-19 illness. Any claim for workers compensation due to the illness would be investigated and evaluated based on the circumstances of each claim, but keep in mind that the workers’ compensation system is not the appropriate starting point for COVID-19 concerns, testing and treatment. Claims involving communicable disease are typically not considered compensable for employees who are at no greater risk than the general public.

Summary
If the coronavirus, COVID-19 causes a loss of income on the Commercial Property Policy or a claim on the Workers Compensation policy, it is highly unlikely either would be covered.

To view our complete risk management library of articles for churches and non-profits, click here.

John Keller, CRM ARM CIC AAI is Client Advisor & Risk Manager at Gulfshore Insurance specializing in non-profit and religious organizations. John works with a wide range of business clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at jkeller@gulfshoreinsurance.com

natural disasterNatural disasters have been on the rise in the last decade, and according to a new analysis, it’s causing a spike in home insurance rates across the country. According to the Insurance Information Institute, 2018 saw 850 “natural catastrophes” across the world—a jump from 740 in 2017 and just 500 a decade earlier. The disasters have racked up damages to the tune of $350 billion in some years – and those were just the insured losses.

A recent report noted that 2017 and 2018 brought the costliest back-to-back years on record for economic losses solely due to weather-related events. As insurance companies struggle to keep up with two years of higher-than-expected losses from natural catastrophes, homeowners may see increases in rates, particularly in more disaster-prone parts of the country.

“Every year in the United States, natural disasters account for tens of billions of dollars in damages,” the report reads. “A significant portion of those damages falls on the shoulders of insurance companies. When insurance companies experience huge loss from natural disaster-related claims, they compensate for that loss with an increase in home insurance rates.”

Average home insurance rates have risen in every state in the last decade, mainly due to natural disasters, according to the National Association of Insurance Commissioners. And Florida’s average rate is the highest in the nation. Florida tends to have most of its damages caused by hurricanes, such as Hurricane Irma, which hit the state in September 2017 and caused $11.1 billion worth of damage, with the vast majority of that to homes, according to the Florida Office of Insurance Regulation. Hurricane Michael hit Florida in October 2018, causing $6.4 billion worth of damage to the state.

You can read the full analysis of the decades’ worth of NAIC data by clicking here.

Employee Benefits How to Prepare Your Workforce for a Natural Disaster

Human resource professionals should prepare their organizations emergency plans now to ensure employees stay updated with crucial information and support, and to make sure business stays on track in the event we’re faced with a hurricane in the coming months.

Here’s a checklist organizations can use to prepare for a hurricane:

Share Disaster Plans & Emergency Resources Early

In anticipation of a natural disaster, HR leaders are often responsible for setting up communication plans and sharing information so that individual employees can prepare. Some recommended resources to share with those who may be impacted include:

  • National Hurricane Center’s Hurricane Preparedness Guidelines
  • Department of Homeland Security’s Emergency Kit and Supply Checklist
  • Local Evacuation Shelter Information & Maps (including resources for pets)

 

Test Your Ability to Contact Employees During/After a Disaster, and Vice Versa

It is critical to encourage employees to update their emergency contact information in the organization’s system to ensure you have up-to-date phone numbers and other pertinent details on hand. At Gulfshore Insurance, we activate a secondary disaster hotline for employees only that allows us to convey critical messages before, during, and after a storm. If employees have cellular service, then they are able to call in to receive timely updates on the agency’s status of operations. A phone tree is another widely used method for communicating with employees, particularly if your organization has more than a handful of employees.

Consider an Alternative When Cell Service Becomes Difficult

While cell phone towers may go down and access to the internet or SMS capabilities may be affected, texting may provide one of the best options for staying in touch. Many organizations utilize an SMS instant-messaging system that allows them to notify employees about operations and other pertinent details. As such, it is important to remind employees about the need for extended batteries and backups in order to effectively use this system.

Extend Deadlines, Alert Vendors, and Pre-Schedule Remote Check-Ins

Business, of course, goes on in the rest of the world and deadlines still loom. If you have any vendors outside the affected areas with employee deadlines you should start working with them to get an extension. Leadership and operations teams may want to pre-schedule call-in times and provide access to a conference line. The calls will allow you to effectively plan for business continuity and report on efforts to check in with your employees.

Consider an Advance Payroll

Many of the activities HR teams will need to address in the immediate aftermath of a natural disaster will, in some instances, be things that have been prepared for ahead of time. As employees get back in touch, additional needs will be identified, but access to payroll funds and cash, as well as a sense of job security, are often uppermost in the minds of staff members. The first paycheck after a storm can be is critical for employees. Remember that if extreme power outages occur, not only will banks be closed, but ATMs will probably not work either–cash is king!

Be Flexible with Attendance and Time Off Policies

Employees who have been displaced from their homes or have evacuated entirely may be anxious about job continuity even as they’re struggling with basics like getting access to food, shelter, gas, and clothing. Part of the communication prior to the weather event will ideally have provided employees with clarity around items such as pay continuity, use of PTO, or flexibility in the company’s attendance policies. As employees return to work, whenever that may be, they’ll still be dealing with numerous aftereffects. Providing consideration for additional time-off without penalty will be important to employees who must keep appointments with insurance adjustors, rebuild their homes, or find new living arrangements; this time may be with or without pay as appropriate and in alignment with the Fair Labor Standards Act for employers in the U.S.

Ryan Laude is a Client Advisor at Gulfshore Insurance specializing in employee benefits. Ryan works with a wide range of businesses to create the best funding options that fit their needs. Comments and questions are welcome at rlaude@gulfshoreinsurance.com