By Kari Dybdahl
The word “risk” is a very broad term. To be in business, risk is always present. Business owners choose what risk they want to take on, avoid, or transfer. Offering a new service or taking on a new job is what us insurance nerds call taking on risk. Simply put, to avoid risk is to not take on the new service or job. To transfer risk is to purchase an insurance policy where you pay a small percentage of premium for the coverage amount purchased.
On a macro scale, offering COVID-19 services is taking on additional risk in your business. What increases the risk is that there is not enough data to predict how detrimental taking on these new operations could be. What we do know is it is not economical to determine if a virus is present or not. It is expensive and very small to detect. Since we do not know if a job site has active viral particles present, all jobs would need to be treated as contaminated due to the high risk of unknowns.
The natural response would be to transfer this associated risk to someone else, i.e., an insurance company where you pay a premium and in exchange the insurance company covers the associated risks. Without a hefty amount of actuarial data, insurance companies will run for the hills since the unknowns are too high for them to confidently insure the associated liabilities/risk, leaving business owners to self-insure or avoid the risk altogether.
An additional complexity is the quality of liability insurance purchased. There are sneaky exclusions in standardized General Liability policies that could very well deny coverage for a claim, such as a communicable disease exclusion. This is due to standard General Liability never being intended or created to cover risks from a viral pandemic, leaving business owners uninsured for CVOID-19 jobs they take on. If a consumer tries to use a product for something it was never intended to be used for, why would we think it would work?
There are a few insurance carriers who are not running for the hills; however, they are taking a very cautious approach to covering COVID-19-associated operations, and the insurance landscape changes every single day. Our environmental insurance brokerage firm has been tracking the offering of associated COVID-19 liability coverage from the start. The solution is for every business offering COVID-19 services to purchase a specialized contractor’s pollution liability with affirmative coverage for COVID-19 operations. This is easier said than done. The coverage is extremely difficult to obtain as the prequalification includes extensive jobsite experience related to biohazard work, prior training for biohazards, and multiple certifications held by key employees. Additionally, all field personnel must be trained in the knowledge of The COVID-19 Pandemic: A Report for Professional Cleaning and Restoration Contractors, Third Edition, May 28th 2020 or more recent versions, and special legal contracts must be in place for virus decontamination work.
In summary, is providing COVID-19 services worth risking your business? In my professional opinion it is a choice specific to your business and should be approached as a long-term service offering. If your business is contemplating taking on the risk without biohazard experience or training prior to the pandemic, I would caution you pause and evaluate if taking on that much risk is worth the potential reward, as it would be nearly impossible to transfer the risk to a third party if something goes wrong.
Kari Dybdahl has a decade of experience in the environmental insurance industry assisting clients from carpet cleaners to municipalities. She has received multiple awards and recognition for her work placing compliant insurance for Crawford Contractor Connection members, ICRA members, and many others. As president of American Risk Management Resources Brokerage, Dybdahl designs custom insurance programs alongside Dave Dybdahl. Please reach out to Kari A. Dybdahl with any questions at 608-824-3341 or [email protected].