With the COVID-19 pandemic still raging across the country (and many parts of the world), contractors are constantly faced with unique and unforeseeable challenges in both the operation and management of their business.
In the time of the Coronavirus, protecting your business and employees means much more than regular hand washing, wearing masks, and physical distancing. It also requires preparing it for the worst – whatever that worst may be.
Having these contractors insurance coverages will help keep your business healthy and afloat, despite the challenges that the COVID-19 may throw your way.
Business Interruption Insurance
Contractors heavily rely on the steady supply of goods and labor for their business operations. With the COVID-19 pandemic still in full swing, intermittent transportation bans, embargoes, and quarantines taking place in the country and around over the course of the outbreak can put them at risk of income losses.
Business interruption insurance is an additional coverage to existing commercial property insurance policies that protects contractors against economic losses suffered due to physical damage to insured property caused by a covered peril. The coverage may include lost revenues, rent or lease payments, taxes, relocation costs, employee wages, loan payments, and even losses associated with losing a key supplier or a business partner.
It is, however, important to note that many insurers adopted exclusions for epidemics and infectious diseases. That said, check the policy or ask your agent if such exclusions exist in the coverage. If they do, you may not be able to receive coverage even if you are able to provide sufficient proof that the virus has caused direct physical damage to the business.
Worker’s Compensation Coverage
The ongoing pandemic raises the possibility of an increase in occupational illnesses across industries, and the contracting business is no exception. Employers and employees alike have concerns about getting sick as a result of being exposed to the COVID-19 virus.
Workers who get sick and hospitalized due to exposure to the Coronavirus may be entitled to workers’ compensation benefits, but only if they contracted the disease in the workplace or in a work-related scenario.
Before they can receive compensation for their injuries and losses, though, workers are likely to have to provide evidence that the infection took place at work or was a direct result of doing work for their employer.
Commercial General Liability Insurance
As the incidence of COVID-19 infections continue to plague many workplaces, contractors who are operating during the pandemic could face claims from their employees and other third-parties for allegedly failing to exercise reasonable care against the risk of exposure to the virus.
Even if your workers’ compensation insurance pays for your employee’s medical bills and lost wages, the said employee can still sue you for additional damages if they can prove that the infection was a direct result of your negligence.
Employers can be deemed negligent and responsible for the Coronavirus exposure of their employees for failure to follow and implement established safety guidelines, which lead to the spread of the virus in the workplace. If an employee’s family members get infected from their work-related exposure, too, they may also sue you for damages.
Your commercial general liability coverage will help you cover the legal costs and any settlements or judgements related to these kinds of lawsuits.
Management Liability Coverage
Officers of the company may be at risk of getting sued by shareholders for alleged unreasonable actions or decisions that caused the company economic losses during the course of the outbreak. It could be that management was not able to observe protocols required by governmental authorities or failed to develop adequate contingency plans.
Regardless of the reasons, management liability policies can provide coverage for legal and court costs, and any settlements resulting from the alleged or actual mismanagement lawsuit.
Management liability is not one but usually a bundle of three types of insurance, namely: employment practices liability insurance (EPLI), directors & officers (D&O) liability and fiduciary liability insurance. These policies are specifically designed to protect the company and its officers from management-related liabilities that may arise in the future.
Protecting Your Business during the Pandemic
The delays and unexpected hurdles that may arise due to the COVID-19 situation can make it challenging for contractors to stay on top of their target dates and deliverables. To make sure that your business is protected from liabilities that may occur, take the time to carefully review your insurance policies and consult with a trusted advisor to better understand the scope of your coverage and risk exposure.
Aside from reviewing your insurance policies, now is also the time to pull out your contract and consider how the contract’s delay, time extension, or force majeure clauses can affect the interests of the parties involved. As COVID-19 is an unforeseeable event that is outside the contractor’s control, it should qualify as a force majeure. But while some projects may have extendable deadlines, others don’t.
Contractors have to practice due diligence, now more than ever. Though this may not make you bulletproof from liabilities and lawsuits, it helps to know you’re covered.