If business owners are looking for compensation for loss of business because of the COVID-19 shutdown and social distancing mandates, they shouldn’t expect relief from their insurance carrier.
“Most – 999 out of 1,000 – insurance policies have an infectious disease exclusion,” said Richard Stein Jr., chief operating officer of Wellhouse Co.
Wellhouse is an independent insurance brokerage firm founded in Jacksonville in 2018 by Stein’s father, Rick Stein.
“We’ve had a lot of conversations with clients. We’re advising them to file claims, but to anticipate there won’t be any relief,” Richard Stein said.
That’s because business damage from the infectious disease shutdown differs from damage sustained during a hurricane, for example, he said.
Storm damage is caused by wind and rain and usually does not affect all policyholders equally. Some suffer total loss while others may be unscathed or only slightly impacted. Also, hurricane damage usually can be remediated within a relatively short period.
COVID-19 doesn’t damage structures and the length of the shutdown causing business loss can’t be predicted, Stein said.
Looking ahead, while insurance coverage for pandemic shutdowns could be added to commercial policies, Stein isn’t sure the market would embrace that option.
The insurer’s business model is based on spreading the risk, so coverage for universal loss would surely increase premiums for business owners, likely beyond what most would want to pay.
“In this case, there is no way to spread the risk. Are we prepared to cover trillions of dollars in loss through insurance premiums?” Stein said.
Like many businesses, the staff at Wellhouse is working remotely and implementing procedures that were developed for hurricane disruption. Its offices are in Wells Fargo Center, a building that was closed for weeks in 2018 after Hurricane Irma flooded Downtown.
The firm’s day-to-day business has shifted from talking to prospects about buying insurance to advising current customers about their coverage.
“The conversation about insurance has slowed down, except claims. We continue to serve our clients,” Stein said.