COVID-19: Business Insurance Considerations
The COVID-19 pandemic is raising many questions regarding insurance coverage for businesses. CPA firms maintain multiple types of insurance to help protect their businesses, each of which may provide coverage relevant to the pandemic.
Below is a sample list of business insurance policies and related exposures that may be insured under these policies. Bear in mind that insurance coverage is governed by the terms, conditions and exclusions of each applicable policy, and is dependent on the facts and circumstances presented.
- Property: Examples of potential exposures include costs to close and sanitize a workplace and business interruption costs. For more information, see Property and Coronavirus: Is My Business Covered?
- Workers' Compensation: Examples of exposures include claims alleging that COVID-19 was contracted through work. For more information, see Impact of Coronavirus in U.S. Casualty Claims.
- Directors' and Officers' and Employment Practices Liability: Shareholders may allege that directors and executive officers breached their fiduciary duty in responding to COVID-19, resulting in a diminution in share value. Employees may allege violation of federal, state or local employment discrimination laws or ordinances, and seek recovery of lost wages and benefits and other compensatory damages. For more information, see Client Alert: The Coronavirus – D&O, EPL, and Wage and Hour Insurance.
- Cyber Liability: Professional service workers are working from home due to COVID-19. As a result, cyber risks are likely to be elevated both due to the risk of inadvertent violations of privacy laws and the intentional acts of bad actors. For more information, see Cyber Risk Implications of the Coronavirus Outbreak.
- Professional Liability: Examples of professional liability claims that may emerge from the pandemic include allegations of improper tax or consulting advice, or errors in tax return preparation or audits. Extensive risk management resources are available in the AICPA Professional Liability Insurance Program Policyholder Resource Center. AICPA members can direct technical questions about accounting and auditing to the AICPA Technical Hotline. Lastly, specific professional liability risk management questions can be directed to the CNA Accountants Assistance Line at 800-CNA-8060 or firstname.lastname@example.org.
All claims or potential claims should be reported promptly and in writing to insurance carriers in accordance with the conditions detailed in the applicable policy. Timely reporting of potential claims allows the insurer to initiate an investigation to determine if a claim can be mitigated or prevented and provides the policyholder with access to the advice and recommendations of the insurer. Additionally, it preserves the rights of the policyholder in the event a future related claim is made.