The coronavirus crisis and the approval of the state of alarm have forced the paralysis of all non-essential business activity until April 13. As of that date, Shopping Centers, establishments open to the public, hospitality, hotels, etc. They must remain closed until April 26, at least. This situation has caused 834.000 workers to lose their jobs in the month of March, and many businesses lose a significant volume of turnover, endangering the continuity of many companies. The scenario that is coming in the coming months is not at all hopeful for the economy and the well-being of society in general.
Many companies and freelancers have requested information from the insurance sector on how insurance can cover the losses caused by the coronavirus. The reality is that the insurance sector, like the rest, was not prepared for a health crisis of such magnitude. There is no insurance on the market that could foresee and cover the economic consequences of a pandemic such as the coronavirus. Nevertheless, At Canarisk we want to highlight and explain the most frequently asked questions, as well as other ways in which insurance can help you.
Is the loss of benefits due to coronavirus covered?
The loss of benefits coverage that is included in most business insurance, is linked to the occurrence of material damage that paralyzes the activity (for example, a fire). The coronavirus has not produced such damage, so this coverage does not apply. There are policies that even include coverage for loss of benefits due to the impossibility of access to the premises or work center by order of the authority, but always as a result of material damage to the property or to an adjoining establishment (for example, fire or collapse in a building adjacent to the work center).
Is there coverage for loss of benefits without physical damage?
The sector has been working in recent years on what is called parametric or index insurance. They are insurance oriented to the occurrence of natural catastrophes, and that has been extended to situations of socio-political violence (terrorism, strikes...). They are based on an index or parameter, for example, that a storm passes a certain distance from the event to be held, or that the rain exceeds a certain amount in a period of time. The loss of benefits due to any of these events, even if no physical damage was caused, would be guaranteed. They are complex policies that require statistical analysis and in recent years interest has grown in extending them to pandemic cases. It is currently an incipient product that is being studied for certain industries, mainly tourism, airlines and freight transport.
Another insurance solution that may be of interest in the future as a result of what we are experiencing is the supply chain interruption coverage. This coverage is designed to indemnify losses caused by damage or destruction in the physical facilities of suppliers that prevent the supply of goods or raw materials.
Is coronavirus covered by the Insurance Compensation Pool?
The coronavirus is not considered an extraordinary event based on RD 300/2004, which lists the cases insured by the Insurance Compensation Consortium. Therefore, It is ruled out that the Consortium assumes the consequences of the coronavirus.
How does the closing of the business affect the coverage of property damage?
One of the concerns of companies, mainly hotels, is that with the closure of establishments, theft or acts of vandalism occur, and if the insurance was going to cover them. At Canarisk we have spoken with top-tier insurers, who confirm that suspend the exclusion of the coverage of material damage caused by the stoppage of the activity or lack of vigilance.
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