You can’t collect on COVID-19 losses – Insurance boss
Sharon Donaldson, the general manager of General Accident Insurance Company, says that businesses that shut down because of the COVID-19 pandemic cannot collect on business interruption coverage claims, even while admitting that insurance companies do not adequately explain this to their clients.
“A lot of companies were closed due to COVID-19, so they would have lost a fair amount of profits because they were not operating,” said Donaldson, while delivering the keynote address at Thursday’s virtual monthly meeting of the Kiwanis Club of Montego Bay. “We got many claims wanting us to pay for business interruption coverage because they were not able to operate in that particular period; and because it says ‘business interruption coverage,’ they say, ‘My business has been interrupted by COVID-19, so I cannot see any reason why I cannot be paid.’”
According to Donaldson, business interruption insurance only covers damage caused to business places’ physical infrastructure that would affect the company’s work, but the coverage does not include the impact of diseases like COVID-19.
“Unfortunately, those dreaded fine points in the documents say that we exclude any payment for business interruption following a pandemic or any kind of disease at all, and you must have physical damage, so closing down as a result of COVID-19 is not a covered peril,” continued Donaldson. “That created a little distrust between ourselves and our insureds (clients), but I would like to think that is as a result of not understanding the product and the insurance company not doing enough to explain to the purchasers what exactly we are selling.”
Donaldson also noted that individuals seeking restitution for COVID-19-related impacts to their jobs would have to prove that their employers failed to put safety measures in place to reduce the spread of the virus in the workplace.
“You can sue the company, but you would need to prove that the company has been negligent in not putting mitigating actions in place for COVID-19. Are they cleaning the place, and did they do social distancing? You would have to prove all of that for them to be seen as negligent, and then the company would have to pay you,” said Donaldson.
“But with general insurance, whatever illness that you have, it must arise from physical damage or injury. COVID-19 is a disease, which we cannot cover, as that is a question for life insurance and health insurance companies,” added Donaldson.
Last October, a survey done by the Small Business Association of Jamaica revealed that 35 per cent of its business operators, or approximately 105 of its 300 members, had to close their doors due to the effects of the COVID-19 pandemic. The survey also revealed that some 60 per cent of persons employed in those businesses lost their jobs.