While the have and have nots among small businesses during this pandemic can be measured by their success in getting state and federal aid, there is another avenue some believe could save many companies. And it’s something these small businesses have been paying for all along.
Does the typical business insurance policy cover a virus pandemic? The Contact 7 Rebound team is asking that question as well as the question of why so few are relying on their insurance coverage to help weather the COVID-19 storm.
Surprisingly, there are a number of organizations that prepared specifically for the potential impact of a worldwide pandemic. The All England Lawn Tennis Club cancelled Wimbledon this year instead of simply rescheduling like most other major sporting events. Why? For the last 35 years, the club has been paying premiums for pandemic protection. The story is the same for the Royal and Ancient Golf Club, host of the annual British Open.
Neither have incentive to hold the events at a later date because insurers are coughing up the ten of millions lost to coronavirus.
Here in the United States, the National Basketball Association paid for a similar policy … and will receive a similar payout, including lost revenues and player salaries.
So, what about your favorite restaurant, bar or retail boutique?
Attorney Dave Teselle of Denver’s Burg-Simpson law firm insists some local, small businesses are missing a potential boatload of rebound money.
“What we really believe strongly you as a small business person should not accept the word, the edict from the insurance company, from the broker that says it’s not worth it, it’s not covered," Teselle said. "You should have someone review the policy who works on that.”
Teselle believes the insurance industry prepared for the oncoming pandemic with a unified decision to deny claims for those businesses that had what’s called “business interruption coverage”. That coverage typically covers property losses from acts of nature including tornados, floods, fire, hurricanes and hail.
Only a third of small businesses in Colorado even have it. And most of those policies exclude viruses and bacteria related losses. Teselle insists that is not a reason to throw in the towel.
“Even if they have a virus exclusion,” Teselle said, “it may not exclude pandemics. It may not include times when the governor says you can’t work. There’s quarantines. There’s stay at home orders. That may be covered even if there are other exclusions in the policy.”
Carole Walker with the Rocky Mountain Insurance Information Association insists it’s unlikely any small business in Colorado paid for pandemic protection. She says those kinds of policies are usually cost prohibitive to the small business owner.
“When you add then the possibility of paying the premium for a pandemic or a virus like coronavirus, that would be a very expensive policy,” Walker said.
Getting a lawyer to review your policy isn’t cheap either.
“You’re right,” Teselle said. “It’s a difficult time for businesses to choose what they’re going to spend money on. But, I can tell you just having a lawyer who is experienced in this area for a couple hours can be worth the expense. There are 4 or 5 things that we would be looking at right away to be able to say whether you might have a claim or not.”
The RMIIA recommends taking advantage of your free options first. That means having a conversation with your insurance representative. That also includes reviewing the policy yourself before considering hiring an attorney or moving toward litigation.
Whether your coverage includes pandemic protections or not, the gradual reopening of Colorado will mean surviving businesses will be letting employees and customers back into their buildings. There is liability in that as well.
The best ways to protect your business from someone claiming your restaurant or shop gave them coronavirus is something both insurers and attorneys agree on.
“If you’re a small business owner and putting in policies and procedures for your clients and your customers make sure you document that so you have that later if someone then says, oh well, they didn’t follow the rules or they were doing things that were reckless,” Teselle said.
Carole Walker’s advice is simple. Follow the leader.
“Make sure you’re taking every precaution, everything that’s recommended by the government to put these safety precautions into place. that will help limit your liability if it ever went to court," Walker said.
Once we’re clear of the COVID-19 threat, both Teselle and Walker believe state legislatures and state courts will be pressured to place reasonable limits on the liability placed on small and large businesses.
After all, Denver’s rebound depends on the success of small business.