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Insurance Coverage and COVID-19

We’ve added a video summary of the original post below.  The date of the video below is 04/16/20

At the time of this writing (03/22/20), there are 30,347 infected and over 388 fatalities due to COVID-19 in the US alone.  Businesses across the country are shuttering in the wake of unprecedented government-imposed restrictions and recommendations by the CDC, NIH and others for individuals to stay home in self quarantine.

Businesses are left wondering what options they have to stay afloat or at the very least replace some of the lost revenue.  One of the first places companies turn to is their commercial insurance policies.  The most common question we see is “Does my business income coverage apply to a shut down or income loss due to COVID-19?”.

To answer this question, we have to first take a closer look at business income coverage.  For the purpose of this writing, I am referring to the most common policy forms nationally.  Such forms are created by ISO (Insurance Services Offices, Inc.) and adopted by carriers and state insurance departments.  Business income coverage triggers as a result of direct physical loss or damage from a covered cause of loss.  What many policy holders may not realize is that business income coverage is a part of the commercial property policy (CP 00 99 04 or CP 00 10) are two examples. This means that coverage must be triggered or started by a covered direct physical loss on the property policy.  While many property policies are written with an “All-Risks” property insurance coverage form, the All-Risks policy covers losses arising from any loss except those specifically excluded.  The stance taken by many insurance carriers to date is that the presence of Coronavirus is not a direct physical loss or damage to property.  Under this interpretation of the virus, coverage does not apply under business income, civil authority, or contingent business income. (CP 00 30 and CP 00 32)  two common business income coverage forms.  The most thorough coverage interpretation on the grounds of a denial I have found thus far is from Zelle, LLP, a firm representing Lloyds of London against a lawsuit defending their denial of Coronavirus claim from Oceana Grills.  A link to the white paper can be found here.  The publication by Zelle, LLP, also goes into detail regarding the coverage or lack of triggering events from Civil Authority and the limitations of contingent business income.

Another excellent read on coverage concerns relevant to claims being filed today is from Strook & Strook &  Lavan, LLP, a team of  transactional, regulatory, and litigation lawyers.

Read their article here. 

To further exacerbate coverage concerns, there is an endorsement that is mandatory in many states where approved that specifically excludes coverage that is the “loss or damage caused by or resulting from any virus, bacterium, or other microorganism that induces or is capable of inducing physical distress, illness or disease.” (CP 01 40)

In response to the initial denials, the argument from policyholders and advocates on behalf of policyholders is contrary to the opinion expressed by Zelle, LLP that Coronavirus doesn’t cause direct property damage.  Coronavirus lives on surfaces for days at a time and as a result the contamination itself would be a direct physical loss and thereby should trigger the business income coverage.  Under this scenario, complications still arise for those policyholders with the endorsement (CP 01 40), exclusion for loss due to virus or bacteria.

While none of this seemingly gives comfort to business owners looking for answers it does give us the direction on what needs to be done next.  Filing a claim for damages or loss.  Unfortunately, discussions with your agent are likely to be unsatisfying as agents themselves don’t have the authority to make coverage determinations on behalf of the carriers.  Your agent may tell you the unfortunate news that they have yet to see a carrier accept coverage or make a claim payment, but you shouldn’t let that discourage you from actually filing a claim.  By filing a claim, you force the carrier’s hand to make the official determination of coverage.  With a coverage denial the carrier has to give you the policy provisions they determine provide the exclusion or coverage limitation giving them the authority for the denial.

Your state insurance administration has likely published a bulletin or notice advising of current actions regarding to coverage under COVID-19.

One such notice is below by the Maryland Insurance Administration

Link to MIA notice

Craig Ey, 410-468-2488

Maryland Insurance Administration Advisory on Business Interruption Insurance

BALTIMORE – The Maryland Insurance Administration is receiving a high volume of inquiries about Business Interruption insurance.

Business Interruption coverage is typically triggered under a commercial insurance policy when a covered risk / peril causes physical damage to the insured premises resulting in the need to shut down business operations.  For example, if a fire damages a business and the business cannot operate during repairs, business interruption coverage would be available subject to the terms and limits in the policy.

Most policies require a waiting period of 24 to 72 hours before coverage begins and coverage continues for the reasonable period of time to restore the property and reopen, subject to the coverage limit of liability.  Some commercial policies provide Business Interruption coverage when a business is shut down due to an Order by a civil authority.  However, the policy still typically requires a physical loss from a covered peril as the underlying cause of the business shut down to apply.

All insurance policies have exclusions of coverage for risks that are too great to be underwritten at an affordable price.  For example, commercial and personal property insurance policies typically contain specific exclusions for loss or damage caused by war, nuclear action and radiation.  The potential loss costs from such perils are so extreme that providing coverage would jeopardize the financial solvency of property insurers. Global pandemics like COVID-19 usually fall into this category. However, policies can be different. We recommend that businesses review their policies and reach out to their insurance professionals with any questions.

The Maryland Insurance Administration would like to reassure Maryland businesses that we are closely monitoring insurance issues related to COVID-19. Our core mission is making sure insurance companies treat customers fairly and follow the provisions in their policy and applicable state laws. We are monitoring relief activity efforts aimed at assisting individuals and businesses at the local, state and federal levels.  As information regarding relief programs becomes available, it will be posted on our website:

Although it’s not  the news you want, it is what you need on hand in the event things do change.  How or why can things change?  State insurance departments, state and federal officials, litigation, the courts, and others will all play a role in what happens in the weeks and months ahead.  While coverage may not exist today by the carrier’s interpretation, those interpretations may not hold up or simply be overruled by regulators or legislators.   Policy holders should be cautioned however that failure to file a claim in a timely fashion could further jeopardize coverage leading to additional complications in an already complex scenario.

Bottom line, file the claim now.  If you’re looking for immediate premium relief, you may also want to consider reducing the payrolls on your workers’ compensation and ratable exposures on your liability policy (likely paryoll or sales).   Many carriers have also adopted grace periods or are providing premium payment flexibility during the pandemic.  Some have even suspended cancellation notices for non-payment of premiums.  Reach out to your broker or carrier billing department to see what options may be available to you.

Jason Rilley is Vice President at The Jacobs Company, Inc. in Columbia, MD.  Jason is a licensed Insurance broker for over 18 years and holds several professional designations, Commercial Lines Coverage Specialist (CLCS),  Certified Professional Insurance Agent (CPIA), an  Professional Workers’ Compensation Adviser (PWCA). 

Start the clock… 3, 5, or 7 days before lost wage payments?

Check out this quick chart for answers on what the waiting period is in your state or province before lost wages kick in from workers’ compensation.

What is the retroactive period when an employee is able to recoup those first unpaid days?

How about who gets to direct care?

It varies by state.  The answers are here!

Continue reading Start the clock… 3, 5, or 7 days before lost wage payments?

Audits and your Liability Policy

A common topic of discussion is the workers’ comp audit.   Either through the horror stories of friends or self experience, you’ve heard the terrible tale of the large comp audit.   You’re now keenly tuned in to the payrolls and exposures on your work comp policy vowing never to let this happen to your organization again (or ever)!

Perhaps you’ve even transitioned to a “pay as you go” program to virtually eliminate the chance of an audit bill.

But… and there always seems to be a but.  What about your liability policy?  While you find yourself plugging the holes in one area, don’t forget the GL policy is often  an auditable policy like the WC.   Don’t make the mistake of assuming that since you’ve notified your carrier or broker of accurate payrolls for the workers’ compensation policy, those same updates translated to your liability policy!  You might be surprised to learn otherwise and we already know, that’s rarely a good thing.

Keep track of your liability policy exposures just as you do on the WC!

Guarantee Insurance Co. in Liquidation!

On November 27, 2017, Guarantee Insurance Company (“GIC”) was ordered liquidated by the Second Judicial Circuit Court in Leon County, Florida. The Florida Department of Financial Services (“Department”) is the court appointed Receiver of GIC.

What does this mean to you?

Well, if you’re insured with Guarantee Insurance Co., it means you have a very short window to find a new insurance carrier!

Continue reading Guarantee Insurance Co. in Liquidation!

Insurance Definitions and Terms

I sound like a broken record on this, but you can’t manage what you don’t understand! Insurance terms and policies are far from commonplace for most of us.

For those of you that don’t live and breath insurance, here’s an in depth list of insurance terms and what they mean to you.

Continue reading Insurance Definitions and Terms

Big Changes with non-compliant Audits!

Ever thought of not complying with your work comp insurance audit? In years past failure to comply with an audit might have caused an estimated audit with exposures inflated by 50% and some carriers were forgiving enough to process non compliant audits with no additional payroll increases.  With the new changes you may want to reconsider unless you’re ready for a potential 200% increase in exposures!

Does your policy have the endorsement WC 00 04 24?


2016-14:  Audit Noncompliance Charge for WC Policies

NCCI has established an Audit Noncompliance Charge Endorsement (WC 00 04 24) that will be included on all new and renewal workers’ compensation policies effective January 1, 2017.  The endorsement enables an insurance carrier to apply an Audit Noncompliance Charge to a workers’ compensation policy if the policyholder does not comply with the annual premium audit of their records.  When attached to policies, the endorsement will include the estimated annual payroll (in the Basis of Audit Noncompliance Charge section) and the annual premium multiplier that may be applied for noncompliance (in the Maximum Audit Noncompliance Charge Multiplier section).

Wait, I don’t have an Experience MOD?

So what if you don’t have an experience rating?  In order to qualify for a rating with NCCI, you need to meet certain criteria.  These qualifications can and do vary by state, but you first need to meet the states minimum premium level for experience rating.  If your premium was $6750 but that was including a MOD rating of 1.5, you don’t actually qualify for a MOD since your standard or manual premium is actually only $4,500 if your state had a $5,000 manual minimum premium limit to qualify.  In this instance, having a manual minimum premium below the eligibility requirements actually saves you from a debit experience rating!

Experience Rating Eligibility in Maryland.

A risk is eligible for intrastate experience rating when the payrolls or other exposures developed in the last year or last two years of the experience period produced a premium of at least $10,000.  If more than two years, an average annual premium of at least $5,000 is required.


As I mentioned, the eligibility amounts vary by state.  As of 10/4/2017 the NCCI requirements are listed below.

2. State Subject Premium Eligibility Amounts

(Exceptions: MA, TX)

(Additional Rules: OR)

A risk qualifies for experience rating when its subject premium, developed in its experience period, meets or exceeds the minimum eligibility amount shown in the State Table of Subject Premium Eligibility Amounts in Rule 2-A-2-c. Refer to Rule 2-E-1 to determine a risk’s experience period.

a. A risk qualifies for experience rating if its data within the most recent 24 months of the experience period develops a subject premium of at least the amount shown in Column A.
b. A risk may not qualify according to Rule 2-A-2-a. If it has more than the amount of experience referenced in Rule 2-A-2-a, then to qualify for experience rating the risk must develop an average annual subject premium of at least the amount shown in Column B. Refer to Rule 2-A-3 to determine average annual subject premium.
c. A risk’s rating effective date determines the applicable Column A and Column B subject premium eligibility amounts required to qualify for experience rating. Refer to Rule 2-B for rating effective date determination.

State Table of Subject Premium Eligibility Amounts

State Rating Effective Date Column A ($) Column B ($)
AK 7/1/17 and after 5,000 2,500
6/30/17 and before 5,000 2,500
AL 9/1/17 and after 10,000 5,000
8/31/17 and before 10,000 5,000
AR 1/1/18 and after 8,000 4,000
12/31/17 and before 8,000 4,000
AZ 7/1/17 and after 6,000 3,000
6/30/17 and before 6,000 3,000
CO 7/1/17 and after 8,500 4,250
6/30/17 and before 8,000 4,000
CT 7/1/17 and after 11,500 5,750
6/30/17 and before 11,000 5,500
DC 5/1/18 and after 7,000 3,500
4/30/18 and before 7,000 3,500
FL 7/1/17 and after 10,500 5,250
6/30/17 and before 10,000 5,000
GA 9/1/17 and after 10,500 5,250
8/31/17 and before 10,000 5,000
HI 7/1/17 and after 5,000 2,500
6/30/17 and before 5,000 2,500
IA 7/1/17 and after 8,000 4,000
6/30/17 and before 7,500 3,750
ID 7/1/17 and after 6,000 3,000
6/30/17 and before 6,000 3,000
IL 7/1/17 and after 10,500 5,250
6/30/17 and before 10,000 5,000
IN 7/1/17 and after 5,000 2,500
6/30/17 and before 5,000 2,500
KS 7/1/17 and after 8,000 4,000
1/1/16 to 6/30/17 6,000 3,000
12/31/15 and before 4,500 2,250
KY 4/1/18 and after 10,500 5,250
3/31/18 and before 10,000 5,000
LA 11/1/17 and after 10,500 5,250
10/31/17 and before 10,000 5,000
MD 7/1/17 and after 10,000 5,000
6/30/17 and before 10,000 5,000
ME 10/1/17 and after 9,500 4,750
9/30/17 and before 9,000 4,500
MO 7/1/17 and after 7,000 3,500
6/30/17 and before 7,000 3,500
MS 9/1/17 and after 9,000 4,500
8/31/17 and before 9,000 4,500
MT 7/1/16 and after 10,000 5,000
6/30/16 and before 5,000 2,500
NC 4/1/16 and after 10,000 5,000
3/31/16 and before 8,000 4,000
NE 8/1/17 and after 6,000 3,000
7/31/17 and before 6,000 3,000
NH 7/1/17 and after 11,500 5,750
6/30/17 and before 11,000 5,500
NM 7/1/17 and after 9,000 4,500
6/30/17 and before 9,000 4,500
NV 9/1/17 and after 6,000 3,000
8/31/17 and before 6,000 3,000
OK 7/1/17 and after 10,500 5,250
6/30/17 and before 10,000 5,000
OR 7/1/17 and after 5,000 2,500
6/30/17 and before 5,000 2,500
RI 2/1/18 and after 10,500 5,250
1/31/18 and before 10,000 5,000
SC 3/1/18 and after 9,000 4,500
2/28/18 and before 9,000 4,500
SD 1/1/18 and after 8,000 4,000
12/31/17 and before 7,500 3,750
TN 9/1/17 and after 9,000 4,500
8/31/17 and before 9,000 4,500
UT 6/1/18 and after 7,000 3,500
5/31/18 and before 7,000 3,500
VA 10/1/17 and after 7,000 3,500
9/30/17 and before 7,000 3,500
VT 10/1/17 and after 8,000 4,000
9/30/17 and before 8,000 4,000
WV 5/1/18 and after 9,000 4,500
7/1/08 to 4/30/18 9,000 4,500


Experience Rating Plan Manual should be referenced for the latest approved


Should You Know Your Carriers LCM?


Your carriers what???

LCM, or Loss Cost Multiplier.

Should you know your carrier’s LCM? How does this affect your company, or your client? First let’s see what an LCM is.

Below is a good description of an LCM and how it applies. This was taken from the 2012 Report from the Maryland Insurance Administration to the Joint Committee on Workers’ Compensation Benefit and Insurance Oversight Committee.  (feel free to skim through the jargon until you get to the “what exactly does this mean?”)

In Maryland, workers’ compensation insurance is a blend of prior approval and competitive rating. In this line, all insurers, with the exception of IWIF, are required to subscribe to a group known as NCCI. NCCI is a licensed rating and advisory organization which files pure premium loss costs with the Md. Insurance Administration or MIA. Pure premium loss costs reflect actual claim information submitted by insurers to the NCCI. Claim information includes lost wages and medical costs. NCCI then aggregates this claim information for use in its pure premium loss cost filings. Pure premium loss costs do not, however, include any other costs associated with writing workers’ compensation insurance, such as profit, commissions, taxes and the expenses associated with providing the benefits to the injured worker (known as loss adjustment expenses). No insurer may use NCCI’s pure premium loss costs until those costs have been approved by the MIA. The rates usually are effective beginning January 1 of each year.

Once the MIA has approved the NCCI’s pure premium loss costs, insurers submit independent rate filings. These filings adopt the NCCI pure premium loss costs and then include the insurer’s expense multiplier. The expense multiplier consists of the following elements from an insurer’s expense and profit information: (1) commission; (2) general expense; (3) taxes, licenses and fees; and (4) profit. In addition, since the NCCI does not include loss adjustment expense in its pure premium loss cost filings, companies modify their expense multiplier to include a component for loss adjustment expense. The insurer’s rates are derived by multiplying NCCI’s pure premium loss costs by the insurer’s calculated expense multiplier. These rate filings are made under competitive rating, which means that insurers may begin to charge premiums based on the specific expense multiplier as soon as it has been filed with the MIA.

Link to Document Here

So what exactly does that mean?  Well, if you don’t live and breath insurance,  rates are estabished in states at a level to cover claims according to statisistical data for the particular state.  Carriers then take this loss cost and add a surcharge to it to cover things like profit, expsenses, agent commissions, etc.  The higher the loss cost multiplier, the higher the base rate you’ll see on your workers’ compensation policy.  The lower LCM you see a carrier files, the lower the rate is going to be for your work comp insurance.

Let’s see an example.

You’re a Virginia based business and your carrier is Erie Insurance.  Carriers files different rates for different “carrier companies” or tiers.  Take a look at this breakdown of different Erie companies in Virginia.  Depending on which company your policy is written with, your rates with essentially the same carrier can vary widely!


Now why on earth would a carrier do this?  Well, not all companies are created equal!  Let’s say you’re a drywall contractor with $10,000,000 in payroll.  You’ve had an excellent claims history over the last 15 years in business and really deserve to be paying insurance with the lowest rates available in addition to a very low experience rating.  Then compare that company with another drywall company which uses uninsured subcontractors, casual labor, and a terrible 5 year loss history.  Let’s take it a step further to say this same company is too small to even qualify for an experience rating.  In this case, if a carrier were to insure this business they might want to put the highest or higher rated tier until they had more experience with the risk.

So do you as a business owner need to worry about your carrier’s LCM?  Not really.  If you’re shopping the marketplace for the best carrier based on price, the rates you see on the quote or proposal are probably the easiest way to gauge the pricing, but it certainly won’t hurt to know where you stand.  If you are shopping your agent, you could always ask- why aren’t I this tier or that tier with my carrier?  If you have a good relationship with your broker, and don’t shop, it certainly might be in your best interests to ask about your carrier’s LCM.

As an agent or broker, you should absolutely be paying attention to LCM’s. Not only will it help you do the very best job for your client, but it could save you tremendous time and resources on the marketing side of your business.





Need help with your ERM/Experience Rating/MOD?

We continue to offer assistance in any area providing experience rating analysis and experience mod management services.
All consultations are confidential. If you or your agent don’t have the resources available, don’t hesitate to give us a call.

We can provide:

  • Premium costs of various losses
    Minimum MOD
    Breakdown of potential premium savings for medical only claims (ERA states)
    Future MOD projections
  • Suggestions to improve the rating, and MOD verification
  • Mod Comparison available for repeat customer Experience MOD reviews

Call or email for options, pricing, and availability.  In some cases, there may be no cost to you for this service.