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As COVID-19 continues to impact businesses globally, organizations must evaluate how ongoing developments impact their ability to operate safely and effectively. It remains crucial for organizations to respond quickly and be as proactive as possible to ensure the health and well-being of employees and the general public.

As Wisconsin employers begin the process of bringing their businesses back online, many owners have questions about insurance coverage. Namely, “How am I covered in the event of injury, illness, damages, lawsuits, etc., relating to COVID-19?”

The answers aren’t always black and white. Claims involving COVID-19, as with any claims, will be evaluated on their own merits and adjusted based on the policy wording and specific details driving each loss.

This is a brief explanation of several common types of insurance, how they are likely to interact with COVID-19, and steps you can take now to protect your interests.

Workers’ Compensation Coverage

For COVID-19 to be covered by workers’ compensation, contracting the disease must be work-related. There must be evidence to prove the cause of infection was a direct result of performing work for the employer. For many claims, this will be difficult to prove.

For the duration of the Public Health Emergency in Wisconsin, however, first responders are covered by workers’ compensation for injuries related to COVID-19 under “rebuttal presumption.” That means it is assumed they contracted the disease as a direct result of employment unless it is proven otherwise.

What You Can Do Now

The Wisconsin Department of Workforce Development has published FAQs specific to Wisconsin workers’ compensation on its website. Employers may also want to seek additional guidance from the Occupational Safety and Health Administration (OSHA).

On April 10, OSHA published interim guidance relaxing recordkeeping for coronavirus (COVID-19) in general industry, stating that contracting COVID-19 is recordable only if the infection is work-related. On May 19, however, the agency issued a memorandum to update that guidance.

As of the publishing of this article, OSHA will require employers to conduct an internal investigation to make a reasonable determination whether the employee’s contraction of COVID-19 is “work-related.”

For a sufficient investigation, the following steps must be taken when an employer learns of an employee's COVID-19 illness:

  • Ask the employee how he/she believes COVID-19 was contracted.
  • Discuss with the employee his/her work and out-of-work activities that may have led to the COVID-19 illness. (Be respectful of employee privacy.)
  • Review the employee's work environment for potential exposure.
    • Check for any other instances of workers in that environment contracting COVID-19. OSHA says cases of COVID-19 are likely work-related if the illness is popping up among employees who work closely together and there’s no alternative explanation.

If the employer determines the employee’s COVID-19 case is job-related, it will be OSHA recordable. If the employer cannot reasonably determine that contraction of COVID-19 is work-related, it does not need to treat the case as OSHA recordable.

OSHA’s record-keeping regulations, however, require employers to create an OSHA record of the investigation regardless of the outcome.

While OSHA has relaxed its stance on COVID-19 recordkeeping for general industry, the requirements have not changed for healthcare. Claims related to communicable and contagious diseases are not generally the intent of workers’ compensation coverage, but each situation will be examined on a case-by-case basis.

General Liability Coverage

While workers’ compensation insurance typically pays for an employee’s medical bills and partial lost wages, employees still have the option to sue employers for additional damages if the injury is due to an employer’s negligence.

For COVID-19 exposure, an employer’s negligence might stem from a failure to provide mandated personal protective equipment (PPE) or failure to mitigate exposure to other employees (e.g., failure to follow established safety guidelines).

You can also be sued by an employee’s family members who were exposed to the virus from the employees’ work-related exposure, and if an employee dies, you could be liable for additional damages.

Employers’ general liability coverage pays for attorney’s fees, court costs, and any settlements or judgments related to such lawsuits.

What You Can Do Now

Review your liability policy and consult with a trusted advisor to understand your risk exposure and coverage. Then, limit exposure and mitigate risk with workplace and policy changes such as remote work, sick leave, staggered shifts, protective gear, etc. You will want to follow safety guidelines established by the state, the CDC and OSHA.

For some employers, your operational flexibility may be somewhat limited, but you want to be able to show that you have diligently completed the proper assessments, reviewed policies and made any feasible workplace changes to limit or contain workplace risks.

Due diligence doesn’t make you bulletproof from lawsuits, but it can be helpful to address the issue of negligence.

Management Liability Coverage

In addition to general liability insurance, many companies hold management liability coverages. Management liability is usually a bundle of three types of insurance: employment practices liability insurance (EPLI), directors & officers (D&O) liability and fiduciary liability insurance.

These types of insurances are specifically designed to protect the company, and its directors and officers, from liabilities that can arise from the daily management of the business. The policies provide coverage for attorney’s fees, court costs, and any settlements resulting from alleged or actual mismanagement.

For example, an employer’s enforcement of specific sick leave policies during an outbreak could give rise to claims of discrimination against protected classes. Such allegations could trigger coverage under an EPLI policy.

Another example is shareholder litigation alleging a lack of preparedness for the potential effect on corporate operations and earnings. This would be covered under a D&O policy.

What You Can Do Now

Organizations should consider where such claims could originate, such as customers, vendors or other stakeholders. Review all management liability policies to understand your risk exposure and coverage.

Some management liability policies exclude coverage for misconduct by the insured, which can include deliberate fraud, dishonesty or willful violations of the law.

To avoid allegations of misconduct, work closely with HR, legal teams, communications teams and insurance professionals to clearly and transparently communicate any changes in company policies and plans to all stakeholders—both internal and external.

Cyber Insurance Coverage

Homeland Security reports a surge in cyberattacks amidst COVID-19 as more businesses quickly moved to provide remote access to employees and customers. Cyber insurance coverages vary widely, and some policies provide coverage that pales in comparison to the true impact of a cyber security breach.

What You Can Do Now

Work with IT and insurance professionals to reduce your cybersecurity risk and understand what coverage you have and what you need. 

Additionally, the primary way hackers gain access to systems is through employee behavior, so train employees to recognize cybersecurity risks and take actions to reduce the possibility of a breach.

So, Are You Covered?

A worldwide pandemic is not the usual scenario covered in risk management strategies, so carriers, brokers and agents are working together to understand how to move forward with everyone’s best interests in mind. Coverage will depend on multiple variables, so we advise you do the following:

  • Read your policy language and find a trusted advisor to help you understand it.
  • Be as proactive as possible to mitigate damages and losses—especially those that may not be covered by insurance.
  • Keep good records. Documentation about business losses and their causes helps you build a stronger case for your claims.
  • Use the business guidance provided by the CDC, OSHA and the Wisconsin Economic Development Corp.

For additional guidance and resources related to COVID-19, please visit our Coronavirus Resources page and contact us. Our trusted advisors have the industry knowledge to help you manage your risk and protect your assets. 

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