HUB International’s advice to corporate clients
HUB International wants corporate clients to report business interruption losses from COVID-19 even if they think the claims will be denied.
The company advises business interruption generally does not cover losses stemming from viral outbreaks or pandemics, but it encourages customers to file all claims for a carrier review all the same.
“This way, the insurance companies can provide the official response,” said Moyer, Toronto-based senior vice president, complex claims leader, national claims, Canada, at HUB International. “A second reason is, it may offer some assistance if they are trying to recover from some government relief program.”
Several Canadian provinces have announced a state of emergency since COVID-19 was declared a pandemic by the World Health Organization. Moreover, many companies have been cancelling events and closing offices as a precaution. The Ontario government, for example, has ordered a shutdown of all worksites unless they are on an extensive "essential services" list.
“Most businesses are shutting down either voluntarily as a precautionary measure, or the government is recommending a shutdown to isolate and control this virus, but there is no physical damage to the business whatsoever,” Moyer said in a recent interview with Canadian Underwriter.
Standard policy terms feature exclusions for pandemics and viruses, which generally means there is no coverage. HUB does, however, urges clients to keep an eye out for governmental relief programs that they may qualify for.
“Most of the time, when the government does decide to offer support to local businesses with financial resources, oftentimes [that’s] available only where there are no other means of recovery. Insurance is another recovery avenue,” Moyer said.\
“Having a denial of coverage from your insurance carrier will satisfy that requirement,” said Moyer. “So that’s another reason we think it’s in the client’s interest to report claims.”
In the face of an uncertain economic situation and tightening credit conditions, the Canadian government has moved to help affected businesses. They have announced a number of measures including deferral of income tax amounts, increasing credit to small, medium and large businesses, wage subsidies, augmenting credit, loans, and other assistance. You can access further information here.
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Provinces have announced relief measures as well. The Canadian Federation of Independent Business website provides further details.
The bottom line is, closure due to a pandemic is not what insurers intend to cover when they underwrite business interruption. Moyer said HUB is receiving “hundreds if not thousands” of calls from clients across Canada and the U.S. asking if they have a claim.
“Our response to that is, ‘Generally speaking, this is a largely uninsurable event. However, as brokers, we do not have the authority to deny claims. We think it is in our clients’ best interests – if they aren’t sure, and they have had an impact on their business – to report it and let the insurance company come back with a formal decision on coverage.”
RELATED READING: HUB's Coronavirus Resource Centre