Insurance Considerations In the Time of COVID-19

This year started out on a positive note for most homecare businesses—and then COVID-19 threw an ugly left hook. In the wake of the country’s “new normal,” homecare business owners and management teams are faced with making a myriad of significant business and operating decisions at the spur of the moment. The creation of new policies and procedures to address working from home is high on the list, but so are how to effectively, efficiently and fairly deal with layoffs and/or furloughs, on-site and off-site working conditions, infection control protocols, pay cuts, client retention and other issues.

It is not surprising that many businesses are looking to their insurance program providers to help them manage, minimize and mitigate potential and actual losses as they weave their way through the haze of uncertainty and maze of confusion during this unprecedented time.

Loss of Income

One of the biggest areas of concern is the loss of business income due to government-mandated shelter-in-place orders. Sadly, many business owners found out that their policies did not cover business interruption due to a pandemic. However, there may be a loophole: coverage provided due to business interruption by an order of a civil authority. This coverage ensures that a company will receive all or a portion of income lost over the period of time that the government (i.e., the civil authority) prohibits access to the business. Although this coverage is provided in most policies, it is important to note that every policy is different and there are certainly exclusions that may include viral outbreaks, communicable diseases or pollution. Therefore, it is imperative that business owners review their policy with their agent or broker to determine if coverage is applicable during this time.

Furthermore, this coverage usually has specific criteria on when it will be triggered. The waiting period could be a set number of days, weeks or months before it kicks in. The policy may also require the policyholder to meet other requirements, such as submitting a notice or meeting a deductible. Again, a review of the policy with the agent or broker is imperative to understand the availability of coverage and requirements to be met.

Workers’ Compensation

The second major area of concern is the payment of workers’ compensation claims for those employees who contract the coronavirus in the course of their duties on behalf of a homecare employer. Since ordinary life illnesses such as the common cold and flu are excluded from workers’ comp claims, this illness could very well be treated the same.

Arguably, homecare workers fall under the ‘essential workers’ category and are considered to be health care workers in every sense. As such, it would also seem that their workers’ compensation claims would be paid. However, that is not always the case. Here is why: many states are still requiring claimants to shoulder the burden of proof that they in fact contracted the virus while performing their job and due to the inherent nature of their job.

In other words, the sick employee must be able to provide specific information as to which patient gave them the virus and when in order for their claim to be compensable. It is obvious that this information is impossible to nail down when dealing with a highly contagious illness that is both airborne and transmitted via contact.

Thankfully, many states have removed this barrier for homecare workers and claims are being paid. However, this change will translate into an increase in carrier rates, which will mean higher annual premiums for workers’ compensation coverage for homecare businesses in the near future.

Some state legislatures are also providing some level of protection for employers due to potential negligence and wrongful death civil lawsuits under the “workers’ compensation exclusivity doctrine.” This doctrine states that an employee who received workers’ compensation benefits cannot file a lawsuit. Please keep in mind that each state has its own statute on
this doctrine.

Employment Liability & Potential Lawsuits

COVID-19 is also impacting employment liability practices (EPLI) and lawsuits against employers are on the rise. Several areas of concern are:

Negligence and wrongful death claims: These claims have arisen primarily due to claims that the employer did not take COVID-19 warnings seriously enough and failed to implement and actively engage in carrying out actions that would reduce the likelihood of their employees, customers, vendors and others contracting the coronavirus.

Whistleblower claims: Some employees will feel that they were retaliated against for reporting health and safety concerns related to COVID-19. It is important to keep in mind that retaliation is illegal under the National Labor Relations Act and several other laws. Additionally, many states have whistleblower protection statutes in place.

Occupational Safety and Health Administration and Family Medical Leave Act claims: Claims that employers failed to implement proper procedures and policies to reduce their employees’ exposure to COVID-19 and help reduce its spread will be on the forefront. Additionally, those who felt their rights were not granted under the Families First Coronavirus Response Act will submit claims.

Wrongful termination claims: In light of layoffs and furloughs spurred by government mandated shelter-in-place orders and shutdowns of non-essential businesses, former employees may feel that they were singled out for one reason or another. With the loss of income, they may feel that suing is their only recourse, whether warranted or not.

Third-party employment claims: Customers, vendors and family members of employees may file lawsuits claiming negligence, wrongful death, etc. Not all EPLI policies provide coverage for third-party claims. Hence, it is imperative to review your policy with your agent or broker.

Wage and Hour and Fair Labor Standard Act claims: Many employees are working remotely to slow the curve. As a result, record-keeping and time capture of actual hours worked has changed. Additionally, new work schedules may have been created. These changes may give rise to wage and labor disputes.

EPLI insurance provides a level of protection in the event any of these claims are made against your business.

Cybersecurity

A final area of concern is cyber security. Cybercriminals are taking advantage of the fact that companies’ operations and management teams are focused on responding to the plethora of COVID-19 changes. They are also acutely aware that a large majority of employees are working remotely, which demands many organizational network changes. Hence, agencies are even more vulnerable to heightened cyber-attacks in the form of phishing emails, ransomware and other malicious acts.

Take a moment soon to speak with your agent or broker to discuss your current coverages to make sure you have the protection necessary to protect your assets and reputation. It could mean the difference between staying in business or closing your doors.