The Other Side: COVID-related Insurance Claims and Recovery

The United States is still caught in a plateau of the ‘first wave’ of coronavirus infections and deaths. But the passage of time and lifting of restrictions have many of us looking to get back into some sort of routine – working from home, mask wearing, and social distancing could be wearing us down. But these precautions are going to be with us for the foreseeable future, a “new normal” according to health officials.

Protective measures can shield us from the virus, but no amount of personal protective equipment can prevent the predicted surge of insurance claims and litigation. From every angle, COVID-19 and the insurance world are colliding. For insurers and adjusters, things could get wild.

Excluding Reason

The current turmoil in the insurance world boils down – as it often does – to language. The virus brought the threat of transmission and official orders to suspend operations for many businesses. Yet, while COVID-19 may stop or modify day-to-day affairs, it does not cause “property damage” – there is no tangible, physical loss. This loss is financial, and it’s felt more than it’s seen.

The scale of financial loss in a pandemic depends on innumerable factors and is therefore impossible to accurately predict or plan for. Of course, that’s not how loyal, paying policyholders view the situation. And the fact that coverage is excluded could be the match that sparks litigation from customers who were counting on business interruption coverage to help them bounce back.

Springing up to capitalize on these sentiments are groups that plan to band together and take down what they’re characterizing to be insurance companies’ ‘propaganda’ and false assurances. Newly-formed organizations are promoting litigation hotlines and are promising to gain wins for clients – “class action” is being heard on the wind.

Moving the Target

Many experts feel that some of the high estimates predicting mass litigation by policyholders aren’t realistic – the statistics just don’t hold up. Of current cases, most are against cruise lines, meat packing plants, and senior care or medical facilities. The focus makes sense, as these are the very same entities who have garnered much news coverage over a lack of precaution and lax protective measures.

Other minor class action claims are being brought by consumers because of disputes over “lending, tuition and ticket refunds.” Beyond these very pointed assertions of blame, will we see cases from individuals who point fingers at employers or businesses as the causes of illness or untimely death? The fact remains that most often, it’s not possible to prove the source of infection with absolute certainty. This novel coronavirus is unseen, highly contagious, and moving quickly through a population without widespread immunity – trying to pin down blame could end up being a futile endeavor.

Mindful Protection

Everyone can see the gap in liability protection for businesses, and unenforceable safety standards from often-conflicting federal, state, and local authorities make the situation even more confusing. In time we could see official OSHA standards, limits on liability, and perhaps even federally-backed funds for claimants in COVID-19 related cases. Some feel that the scope of loss in a pandemic is so great, that only government can carry the burden. They suggest that a program similar to FEMA’s flood insurance could provide the protection businesses need. Whether federally- or privately-backed, could pandemic insurance be readily available in the future? As the country gazes toward a predicted resurgence of illness in the fall, everyone is looking for solutions.

Meanwhile, for businesses that hope to reopen, the mere threat of potential litigation can be enough to keep doors shuttered. Legal experts insist that the threat is overblown and that businesses should focus on taking reasonable precautions to protect employees and customers. But that isn’t much solace for a business that’s struggling to keep afloat and can’t afford a lawsuit.

On the other hand, giving companies protection against liability could erode public trust. Consumers could feel that they’re caught in a ‘swim-at-your-own-risk’ scenario. And that could seriously backfire on hopes for economic recovery.

Level Best

Regardless of where this current train ends, it’s likely that on the way we will see an uptick in coronavirus-related cases. Some will assert business losses and interruption, others will place liability on the shoulders of companies and entities. We would suggest handling these claims as you would any other – a lack of direction does not sanction oversight. Instead, as we’re all navigating this storm, we need to be extra diligent in gathering data that could very well change the future of the industry.

Treat each claim as unique and document individual facts and circumstances. Fairness and thoroughness are key when facing COVID-19 claims. Keep in touch with legal counsel throughout the process, and be sure to keep an eye out for even the smallest signs of abuse. For incidents that generate multiple claims, there’s nothing wrong with bringing in several adjusters. In fact, it might be the best plan going forward. We’ll need as many experts on the situation as we can muster.

Depend on Experts

In critical times like these, with a possible flood of insurance claims on the horizon, the professionals you typically rely on could already be busy. As more policyholders look for compensation, you could be left without the needed expertise to handle their requests.

The Bar List insurance network is here for you during tumultuous times. We understand what’s at stake and can help you find top-quality agents, attorneys, adjusters, and industry experts. Get in touch with us today to learn more and gain access to thousands of insurance and legal professionals who are ready to help you handle whatever the future brings. We’re honored to assist, and look forward to serving you.