Commercial Insurance and the H1N1 Flu

Commercial Insurance and the H1N1 Flu

The anticipated ‘outbreak’ of the H1N1 flu has certainly raised personal concerns for many people. However, business owners must also be concerned and prepared for the flu’s potential impact on their businesses and, working with their agent/broker, must examine the coverage that may or may not exist in their commercial insurance programs.

Since a true ‘outbreak’ would be a first time event, it makes the various coverage scenarios difficult to predict as there is no existing case law surrounding such an event. An ‘outbreak’ of the H1N1 flu could have an impact on any or all of the commercial insurance policies below (along with others):
>Workers’ Compensation (A “disease” acquired as a result of one’s work is generally covered under most WC policies, but, how would an employee prove they contracted the flu at work/as a result of their work?)
>Business Interruption - Business interruption coverage protects a business from losses due to unavoidable interruptions in their business operations, however, this is a property policy and the required coverage ‘trigger’ is physical damage. Since an outbreak of flu would not be considered “physical damage”, coverage may not apply.
>General Liability – This policy includes coverage for third party claims for bodily injury (such as a ‘slip and fall’ injury). However, the flu may not meet the GL policy’s definition of ‘bodily injury” and the GL policy may include exclusions that limit or deny coverage for bodily injury related to infectious disease and/or “organic pathogens”.

To respond to the potential gaps in coverage, some insurance carriers are offering new policies providing extra expense coverage for a suspension of operations by a public health official. Since these policies are new, careful attention must be paid to the terms and limitations contained therein. (These policies are generally written on a ‘non-admitted’ basis, have limited coverage per location, have strict exclusions, and can be very expensive.)

Given the exposures outlined above, a careful review of one’s current commercial insurance program with a qualified insurance agent/broker is certainly warranted.

Timothy J. Hutton, CPCU, AFSB
timothyjhutton@gmail.com
LinkedIn Profile: http://www.linkedin.com/pub/0/190/12b