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Does My Commercial Insurance Provide Protection from COVID-19?

A breakdown of how commercial insurance treats COVID-19 claims.

Whether you believe that COVID-19 (Coronavirus) is serious or it will all blow over, it impacts everyone’s peace of mind. In light of the growing cancellations, postponements, and travel disruptions, you may have insurance questions. Does your commercial or church insurance provide any coverage for losses as a direct result of COVID-19?

One thing to keep in mind is this: Most policies and all wording in these policies are filed and approved by your state insurance regulatory department. This department is in place to protect you, the consumer, from any language in the policy that might be harmful to you.

In broad, general term, almost all workers compensation and property insurance policies specifically name viruses and bacteria as a cause of loss that is not covered. In fact, this exclusion is mandatory for the insurance company to include in the property section of the policy in many states. An insurance company would need to file an exception in order not to include that exclusion in your property policy.

All state insurance departments approved the virus and bacteria exclusion in 2006. The request to include this exclusion to policies included the back-story which specifically mentioned SARS, influenza (such as avian flu), legionella, and anthrax. In short, in 2006, the advisory organization of insurance companies, ISO, and state insurance regulators agreed that virus and bacteria should be excluded as covered peril in property and workers compensation policies.

But, there is possibly some coverage in different policies, Let’s look at some of the most common policies that might respond to COVID-19 losses.

Workers Compensation

Many look to the workers’ compensation policy for coverage if they contract COVID-19. However, the hard truth is that coverage most likely won’t exist under this policy. According to the policy, and also shown in a well-written article by Broadspire, coverage requires two conditions to be met:

  • The illness was contracted occupationally, meaning, in the scope of your work.
  • The illness was caused by conditions particular to your work.

This applies most aptly to healthcare workers. It is unlikely workers’ comp will cover contracting COVID-19 from a coworker, as it is most likely not covered. Most work comp policies have clear exclusions for diseases and illnesses like influenza and the common cold. The hardest thing is proving where you contracted the illness. Especially when it’s airborne, it can be difficult. Once the spread is outside of a workplace, the burden of proof rests on the employee. Employees should turn to their health insurance policies if they sustain medical costs.

Business Income

Business Income coverage pays for lost income if you are forced to stop business operations. However, Business Income coverage only applies when there has been property damage or government-mandated shutdown due to property damage. And that damage must be covered by the policy. Here are some examples of where coverage applies.

  • A fire at your print shop stops work for 6 months. Business income insurance covers lost revenue.
  • A tornado that destroys a tenant’s store next to you. This causes authorities to close the entire strip for a month for safety. Business income could provide coverage.

However, if you are forced to close your business for a month because of a pandemic like COVID-19 coverage is not provided because no property has been damaged.


People and organizations turn to liability coverage when they are responsible for causing bodily  injury to a third person.  So, what do liability policies say with regard to being accused of spreading a virus?

First, one must understand in order for payment to be made under a liability policy the injured party must show the party he was accusing was negligent and that the negligence was the cause of the injury.    Since proving where a person  contracted a virus would be difficult to impossible, the likelihood of a successful claim is very small. 

Second, liability policies provide for defense costs, so if one were accused of spreading the virus an insured might expect their liability policy to protect them.  What do policies say?

The most widely used homeowners policies say under the exclusions in the liability section::

            *6. Communicable Disease – “Bodily injury” or “property damage” which arises out of the transmission of a communicable disease by an “insured”

One should not expect a homeowners policy to respond, but there are many companies and individual wording would need to be examined.

The industry standard commercial liability form does not contain an exclusion for injury caused by transmitting a communicable disease but there is an amending “endorsement” available that does and it is widely used.  Again, it would be  necessary to examine the policy in question to see specific wording.

A liability policy may be one place coverage could be found, but there is very little likelihood of a claim occurring or being paid. In fact, the Indiana Department of Insurance has issued a special communication specifically for child care providers.

Cyber Insurance

Surprisingly, cyber insurance could be one of the only places you could find coverage for COVID-19, but maybe not in the way you’d think. Cybercriminals like to take advantage of the chaos, and right now amid the spread and uncertainty of the scale of COVID-19 is a golden opportunity. Major names like the World Health Organization (WHO) and Wired have reported phishing emails sent portraying an actual WHO email. They have titles like Coronavirus safety tips and other enticing lines. These emails contain links that when clicked can upload malware to your computer and system. Once accomplished, hackers have control over your system. They can hold your programs and computers hostage for ransom, infiltrate and steal your customers’ information, and even steal your own emails to start phishing employees and clients.

This is what cyber insurance defends against. If you don’t have a Cyber policy, now is the time to consider one, especially since over half of all attacks are against small organizations. Capitol Insurance has a broad array of choices to provide you peace of mind in this new and growing area of business loss.

Even though most instances concerning COVID-19 will not be covered by your property and liability policies, there could be exceptions. If you have questions don’t feel like you have to go at this alone. This is why you hired us as your independent insurance advisors! Give Capitol a call today (317) 253-1155 to discuss further or for additional information