The COVID-19 pandemic has caused construction project delays and cancellations, and shut down many site operations. Construction work that’s allowed to continue exposes companies to a new risk: workers exposed to coronavirus infection at work.
Construction businesses need contractor’s insurance now, more than ever, to mitigate risks and liabilities the pandemic may throw their way.
These insurance policies will help you protect your business’s vulnerabilities, address future losses, and respond to unprecedented challenges as the Coronavirus outbreak rages on.
Business Interruption Insurance
Contractors and other businesses that operate in the construction industry depend on consistent supply of goods and labor to keep their operations running smoothly.
General business interruption insurance is a policy intended to protect businesses against loss of income caused by unintended interruptions to the business operations. If your business is forced to shut down because of COVID-19 contamination, you may use your BI insurance to cover for lost profits.
It’s important to note, however, that many BI policies have limitations. If your BI insurance contains an exclusion for bacterial and/or viral infections or a requirement for physical damage, a determination will have to be made as to whether COVID-19 is covered by your policy.
Supply Chain Insurance
Supply chain insurance is a contingent business interruption insurance (CBI) that protects businesses against losses suffered as a consequence to interruptions in the supply chain. The policy covers economic losses arising from the forced closure or direct damage to the property of your business’s suppliers or customers.
To trigger the supply chain insurance coverage, your business must be able to prove that the COVID-19 outbreak or any government restrictions related to the pandemic caused an interruption in your business’s supply chain and, consequently, resulted in loss of income.
Commercial General Liability Insurance
COVID-19 infections in the workplace continue to surge. And with this, contractors are constantly faced with liability risks, should they fail to protect their employees and other people from exposure to the Coronavirus while in the construction premises.
The commercial general liability insurance is known to cover liability for work-related property damage and bodily injuries. In the time of COVID-19, it can also serve as your first line of defense in case your company gets sued or faces claims for causing or failing to take adequate measures against the transmission of the virus in the workplace.
Some CGL policies contain exclusions for viral and bacterial diseases or require you to purchase an optional coverage for contagious disease outbreaks. Be sure to review your policy to better understand its scope and limitations.
Worker’s Compensation Insurance
The pandemic has caused an increase in occupational illnesses in many industries, including the construction industry.
Most businesses are required to carry workers’ compensation insurance, a policy that covers employees who got injured or contracted an illness in the workplace, including COVID-19. An employee, however, will only be entitled to a compensation claim for COVID-19 if he or she is able to prove that the infection took place within work premises or as a result of doing job-related tasks.
As the policy coverage is based on “work-relatedness,” it’s critical for employees who file for workers’ compensation claims to note the time, place, and circumstances surrounding the exposure.
Directors & Officers Liability Insurance
It’s not just the company that’s at risk of COVID-related liabilities, but its directors and officers, as well.
A company’s executive leadership may be subjected to shareholder lawsuits for alleged mismanagement or unreasonable actions and inaction in response to the current Coronavirus situation. It could be that the company’s officers have failed to comply with or implement government-mandated health and safety protocols or were not able to develop effective contingency plans that resulted in considerable losses.
A directors & officers (D&O) liability insurance policy provides coverage for the legal costs and liabilities that may arise from shareholder lawsuits.
Insurance coverage is a relevant issue for companies, with or without the threat of an ongoing pandemic. That being said, it is best to prepare for these types of risks before they happen.
There’s no better time than the present to give your insurance policies a good review (preferably with the help of an experienced attorney) and assess whether they can adequately protect your construction business against possible losses arising from COVID-19.
Rachel Porter is the content specialist for Custom Contractors Insurance, LLC, an Arizona roofing and contractors insurance company.