“Do I Really Need Flood Insurance?”

Floods are the nation’s most common and costly natural disaster and cause millions of dollars in damage every year. Floods cost America, on average, $8.2 billion each year (according to 2015 data). Whether people end up having to repair or replace their building and or its contents from just one inch or several feet of flood water in your home or business, recovering from flood damage is expensive!

Most homeowners’ and renters’ insurance policies do not cover flood damage, so it is important to talk with your clients to explain what flood insurance policies cover. As an insurance agent, you can help them understand why flood insurance is an important asset to their financial security.  If they don’t already have a flood insurance policy, you can help them buy providing a quote.

What’s Covered?

The cause of the flooding matters. Damage caused by a sewer backup is only covered by flood insurance if it’s a direct result of flooding; the damage is not covered if the backup is caused by some other problem.

Contents and building coverage are purchased separately (for the Preferred Risk Policy, there’s an option for combination coverage for both contents and building coverage), but there are always separate deductibles. Unless your insured has contents coverage, flood-damaged contents are not covered.


Deductibles apply separately to building and contents with different options available.  As with other insurance plans, a higher deductible will lower the premium but will also reduce the claim payment, meaning insureds will need to cover the difference out of their own pocket. Sometimes a mortgage lender will set a maximum amount for the deductible.

Some People Have to Buy Flood Insurance

Homes and businesses in high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance. While flood insurance is not federally required if people live in a moderate- to low-risk flood area, their lender may still require them to have insurance.

If your insureds live in a high risk flood zone and they have received federal disaster assistance in the form of grants from FEMA or low-interest disaster loans from the U.S. Small Business Administration (SBA) following a Presidential Disaster Declaration, they may be required to maintain flood insurance in order to be considered for any future federal disaster aid.

Want to know more about flood insurance? Check out our Flood Insurance Made Simple continuing education course found in our Insurance Continuing Education Course Catalog.

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Who Needs Errors and Omissions Insurance?

9975002Errors and omissions insurance (E&O) is a type of professional liability insurance that protects companies and their workers, or individuals, against claims made by clients for inadequate work or negligent actions. Errors and omissions insurance often covers both court costs and any settlements up to the amount specified by the insurance contract.

E&O insurance covers situations that traditional liability insurance policies do not cover. People should have errors and omissions liability insurance if they provide a service for a fee. If they don’t perform the service correctly or don’t deliver on time, the effects could cost a client. In these cases, E&O insurance coverage is essential.

Insurance Agent Scenario

Karen Jones is a licensed insurance agent who places her own auto coverage through the agency in which she works. The agency owner doesn’t know that Karen also places vehicles owned by her relatives on her own auto policy because the agency waives commissions for employees. When one of Karen’s uncle’s vehicles is stolen and he files a claim, the auto insurance carrier denies coverage because Karen Jones, the insurance agent and named insured, does not have an insurable interest in the vehicle. The carrier rescinds coverage back to inception for the vehicle.

What happens when Karen’s uncle brings an Errors and Omissions (E&O) claim against the agency?

Scenario Answer:

The E&O carrier would consider this a liability claim and pay Karen’s uncle. However, the agency not only has to pay its deductible, but also must live with this claim on its loss history. It’s likely that Karen’s employment will be terminated and that she will lose her insurance license. In the future, the agency owners will remind employees who purchase coverage through the agency must purchase that insurance through another employee—who has no interest in covering the property—who will manage the account.

Coverage Varies by Company

Insurance agents and brokers, registered investment advisors, financial planners and other financial professionals can obtain E&O insurance. Regulatory bodies, such as the Financial Industry Regulatory Authority (FINRA), or company investors often require E&O insurance. The benefits an E&O insurance policy provides can vary greatly depending on the policy and issuing insurance company. E&O insurance may, or may not, cover temporary employees, claims stemming from work done before the policy was in force, or claims in various jurisdictions.

As an insurance agent or broker shopping for E&O insurance for your clients, remember that not all policies are created equal. E&O coverage is based on the client’s needs, risk level, and business budget.

Liability limits and deductible amounts will vary between insurance providers. And, some policies might exclude certain coverage types. To find the right policy, get quotes from multiple insurance carriers and compare terms. Make sure you understand all parts of the policy before presenting it to your client.

Want to know more about E&O coverage? Check out our Errors and Omissions offering in our Insurance Continuing Education Course Catalog.

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The Personal Auto Policy (PAP)

personal auto policy

For many Americans, a car is the single most costly property they own and for most others, second only in value to their homes.  For most, a car is also essential to their life style, since contemporary American society has been built around individual auto ownership rather than, say, widespread access to good public transportation. Many families own more than one primary car, as well as supplementary vehicles, such as RVs or golf carts. 

Driving is a skill. To do it right, the driver needs to be alert, focused, responsible, and sensible. Not all drivers meet those criteria. They get into accidents with other cars or just by themselves. But even careful drivers cannot always avoid accidents.  

Since 1971, the Insurance Services Office (ISO) has been providing property/casualty insurance companies with comprehensive risk data and analysis and model insurance policy language. ISO’s actuaries and legal experts write standardized policy language which is the foundation on which many insurers build their coverage programs. Among ISO’s forms is the model Personal Auto Policy (PAP). Here’s a brief look at what the PAP covers. 

You Injure Someone ia Car Accident 

Somebody has to pay for the damage cars and drivers do to other cars and the medical costs of the injuries accidents cause. States do not want this burden falling on them. That is one reason every state has some form of motorist financial responsibility law. These laws require drivers to demonstrate they are able to pay the costs for any accidents they cause. Most states require the purchase of auto liability insurance in minimum amounts set by law to cover at least a portion of motorists’ legal liability to others. 

Most commonly, liability limits are written as a split limit. A split limit will be written like 25/50/25. The first number ($25,000) represents the amount per person that could be paid for bodily injuries incurred as a result of the accident. The second number ($50,000) is the amount that could be paid, up to a maximum total, for all bodily injuries incurred in the accident. The third number ($25,000) describes the payment that could be issue for all property damaged in the accident. Remember, this coverage is for others involved in your accident, not for you or your vehicle.  

For example, Texas motorists are required to carry bodily injury and property damage liability insurance. Minimum limits are 30/60/25. The state requires motorists to show proof of insurance when they:     

  • are asked for it by a law enforcement officer; 
  • have an accident; 
  • register a car or renew its registration; 
  • obtain or renew a driver’s license; or 
  • get a car inspected.  

 Someone Steals Your Car or Damages It 

Comprehensive coverage, on the other hand, pays for repairs to your vehicle when it is damaged by something other than a collision. A rock flies up and breaks your windshield. Or maybe your car gets stolen. Or you hit a deer that runs out in front of you. Comprehensive insurance covers the damages. It also covers damage from natural disasters such as fire, wind, hail, and flood. What comprehensive doesn’t cover is any type of auto accident damage. 

You Have an Accident 

Collision insurance pays for your vehicle to be repaired after you collide with another vehicle or an object such as a tree. If you crash into a wall, fence, or another car, your collision coverage pays for damages even if it’s your fault. 

Miscellaneous Coverge 

The ISO Personal Auto Policy also offers these coverages: 

  • Medical – Pays medical expenses for injury in an auto accident no matter who is at fault. 
  • Uninsured/Underinsured Motorist – If you get into an accident with someone who has no insurance, or insufficient insurance, these coverages provides a backup that pays for the damages. 
  • Rental Reimbursement – Pays for a rental car while repairs are being made to damages due to an accident. 

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Want to know more about personal auto insurance? Check out our Property and Casualty courses and PAP courses in our insurance continuing education classes. 

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Home-Based Business Exposures

The United States has experienced a rapid growth in home-based businesses in the past decade. The Insurance Information Institute reports that there are more than 11 million home-based businesses in the country, a figure that is expected to rise in the coming years. A survey by AAIS, however, found that a majority of these businesses do not have the proper insurance coverage.   Continue reading

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No Change for Commercial Insurance Prices

Source: Insurance Business America

Commercial insurance prices were virtually unchanged in the first three months of the year compared to the same period in 2016, according to a recent survey by broking and solutions firm Willis Towers Watson (WTW). Continue reading

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Toxic Mold: Are Your Homeowners Customers Covered?

Mold can grow anywhere—as long as it has air, water, and something to feed on. There are literally thousands of species of mold. Many are harmless and can even be beneficial—penicillin is a mold, for example. But some may have toxic effects.

Continue reading

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Ethical Rules of Disclosure in California

Under California ethics rules, insurance agents are required to deal honestly with their customers. That includes fully disclosing certain facts, particularly those that make a difference in the customer’s decision-making process. Here are a few things that the rules require insurance agents to disclose. Continue reading

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History of Workers’ Compensation Insurance

Did you ever wonder how our modern form of workers’ compensation insurance came to be? Workers’ comp has a longer history than you might imagine. For instance, approximately four thousand years ago, ancient Sumerian tablets outlined specific amounts of compensation for workers who were injured in specific ways, and the specific ways in which these injuries could prevent people from going back to work. Continue reading

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FastrackCE announces NEW Online Webinar – Online Convenience

NEW Online Webinar – Online Convenience

California licensees can now earn CE credits via Fastcast, the latest innovation from FastrackCE! These live presentations complement our popular traditional program, making it even easier to get CE.

  • No Final Exam!
  • Use computer, tablet or smartphone
  • Live Feed of instructor
  • Submit questions
  • Chat with attendees
  • Introductory discount
  • BONUS – Coupon to complete remaining 23 hours of required CE included.

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Sign up for Fastcast today!

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Seven Myths About Flood Insurance

Think there isn’t a need for flood insurance in your community? Think again. There are many myths out there concerning flood insurance—when it’s needed, when it’s possible to buy it, and when it’s not necessary. Here are a few of the common misconceptions your insurance customers might hold—and the information insurance agents can use to combat those misunderstandings. Continue reading

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How to Collect Qualified Leads

If you haven’t been seeing much success from buying lists of “qualified leads” from a lead generation company, you’re not alone. Buying leads isn’t the same as collecting real qualified leads. The people on those lists may work for companies that need the type of insurance you sell—or may have bought it in the past. But depending on the type of insurance you sell, anyone may have bought it in the past or be carrying coverage now. That doesn’t make them qualified. They haven’t expressed an interest in you—or the insurance you sell. And calling them isn’t much of a step up from an ice-cold marketing call. Continue reading

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Is That Uber Driver Covered? Coverage Issues for Today’s Ride-Sharing App Drivers

Uber, Lyft, Sidecar, and other ride-sharing taxi companies—known as “Transportation Network Companies,” or TNCs, in the biz—are growing in popularity, not just in the United States, but in other countries as well. They’re growing so fast that insurance coverage for these companies has not fully caught up—and there are major gaps in coverage that affect the companies, the drivers, and the passengers. Continue reading

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Common Mistakes in Selling Disability Insurance

If you sell disability insurance, you have an important job—convince your clients to protect themselves and their families financially in case a severe injury renders them unable to work. This insurance sounds like something everyone needs—but resistance to buying disability coverage is common. Most likely, your client won’t feel an urgent need for this type of coverage—or will already have a low-cost disability plan as part of the benefits they get through work or through a group plan. Continue reading

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Effective Body Language for In-Person Sales

It’s not always what you say that closes the sale—but how you say it. Body language plays an important role in communications, and people are adept at reading between the lines. Your body language can make a prospect more comfortable—or undermine your sales efforts. Here are a few tips for good body language in insurance sales. Continue reading

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Challenges in Selling Auto Insurance

Everyone in the United States who owns a car, truck, or commercial vehicle needs to insure it—so selling auto insurance should be easy, right? Not necessarily. The auto insurance market is highly competitive and price conscious, and customers are more informed these days than ever. Here are a few challenges you may face in selling auto insurance—and how to overcome them. Continue reading

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Improving Your Customer Service

Customer service makes a huge difference in assuring customer retention—especially in the insurance business. If your company offers good customer service, your customers will be less likely to switch to a competitor based on price alone. Here are just a few ways you can improve your customer service. Continue reading

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Selling Long-Term Care Insurance: Tips for Success

Approximately 70% of older adults need some type of long-term care after the age of 65. And it’s not just for seniors. Young and middle-aged people who have been in severe accidents or who suffer from major illnesses may also need long-term care. Most people don’t realize that 40% of people who receive it are under the age of 65. Continue reading

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Defending Your Market Against The Big Insurance Companies: Tips for Small Insurers

Insurance is a great business to be in—because everyone needs it. Even in a slump, people need to hang on to their cars and houses—and feel their assets are protected. But according to this New York Times article, the big insurance companies are making more of an effort these days to boost revenue wherever they can find it, sometimes encroaching on the turf of local insurers. Here are a few tips for competing with the big guys.

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Insurance Continuing Education: Classroom vs. Online Learning

There are plenty of reasons why online insurance continuing education is the perfect solution for busy insurance agents and brokers. However, it’s not for everyone—and there are still reasons some prefer traditional classroom instruction. Here’s a look at the pros and cons of each. Continue reading

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Your Insurance Agency Website: 3 Tips for Converting Online Visitors

Is your agency’s website experiencing a lot of online traffic but not enough conversions? If your answer is yes, take heart in the fact that you are not alone. Today’s insurance agency websites aren’t set-it-and-forget-it marketing tools.

As the face of your agency, your website requires monitoring and attention not only to drive visitors to your page but also to get them to convert. In the insurance industry, a conversion is often associated with a quote or sale. However, in the online marketing world, a conversion happens every time a visitor completes a dwebsite conversionsesired action on your website and can include:

  • Reading, liking, sharing or commenting on a blog post.
  • Making a payment or policy change online.
  • Subscribing to your agency’s newsletter/blog.
  • Completing a customer service or contact form.
  • Clicking on a social media link.
  • Downloading policy forms.
  • Filing an online claim.

If you think that your high-traffic website needs a boost in the conversion department, the following three tips can help.

Get your website optimized. Search engine optimization (SEO) is a great way to improve conversion rates because it’s aimed at increasing your website’s visibility on search engines. This is important because if someone searching online needs help, your website can be the solution. SEO can also help make your website more user-friendly and keep visitors sticking around a bit longer. Take the time to have a discussion about SEO with your web-hosting service or to consult with a digital marketing expert.

Push out great content. To engage with website visitors, especially on an insurance agency website, post content that is helpful, provides solutions and demonstrates your expertise. For example, if your agency is in an area where certain climate issues are a challenge for homeowners (say, a coastal community that is prone to flooding, high winds or nor’easters), post informative content to help visitors learn more about products, services and resources to help mitigate losses. Do you specialize in a specific industry, such as agriculture or manufacturing? If so, post content relevant to what your agency does best, and include a strong call to action to request more information, get a quote or download an industry-specific white paper or brochure.

Design a website with a clear and simple call to action. What do you want visitors to do when they come to your website? A CTA can be a single word, phrase, image or button that asks visitors to take a specific action. Put even more simply, it’s a key element that asks visitors to do something. For example, do you want them to learn more about your agency’s multiline discount policy? If so, provide a button that, when clicked, directs them to the page where they can learn more. On that page, include another button for them to click to get a quote. You get the idea. But whatever you do, make sure your CTA is clear, concise and easy to navigate, and use simple language.

When attempting to increase website conversions, you should expect to deploy a number of strategies to experience the best results. Once you get started, give your new changes some time, and be sure to monitor your results to see what’s working and what isn’t.

Now you can spend more time converting online visitors to your website and less time sitting in a classroom completing your continuing education credits. At FastrackCE, we offer courses on a broad range of topics, including most state-mandated courses, such as ethics, flood, long-term care and annuity training. For more information, call 800-544-3605, or visit us at fastrackce.com.

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Cybersecurity and Working Remotely: Are Your Business Clients at Risk?

Cybersecurity RisksThe COVID-19 pandemic has forced many businesses to either temporarily shut down, or remain operational and adjust to employees working remotely in order to protect the health and safety of others. Even as the country begins to slowly reopen, some major companies have already announced that they will have employees work from home until at least 2021. In fact, according to the Society for Human Resource Management, approximately 17% of the HR leaders in 2,284 U.S. companies surveyed said they will very likely allow employees to work from home on a permanent basis in the very near future.

Unfortunately, cybercriminals are taking full advantage of the pandemic and our new normal. And while it’s very likely that your business clients have been diligent in safeguarding their systems and data from cybercriminals, the pandemic has created additional exposures that are putting cybersecurity protocols to the test.

Remote access risks
Simply put, remote access is the ability to access a computer or network, at home or in an office, from a remote location. The risk of remote access services and software is that they can allow a hacker to gain access to a business’s system, exposing it to a host of IT security threats. Once a hacker is inside the system, it can be very difficult to prevent data loss and phishing attacks, or protect against ransomware and other threats.

The following are three remote access risks for businesses to be aware of and guard against.

  • Browser-based attacks. By compromising web browsers (e.g., Google Chrome, Microsoft Internet Explorer), hackers gain entry to end-user systems. Once inside, cybercriminals spread malicious code throughout the company network and steal sensitive data. Web attacks often use social engineering to persuade users to take actions that launch the initial attack. For example, an employee clicks on a link in a phishing email that directs them to a web page where malware downloads to their device.
  • Systems being exposed to unsecured and unreliable wireless networks. Home office internet and Wi-Fi connections aren’t always as secure as those used in the office environment. And the more mobile devices — PCs, tablets and phones — that employees use to conduct company business, the more opportunities there are for cybercriminals. Even smart speakers and virtual assistants pose a significant risk, as cybercriminals use silent ultrasound waves to trigger smart devices in prompting users to reveal their credentials and passwords.
  • The inability to remediate security incidents on remote workstations. Most businesses have network monitoring and security tools to protect their systems and to catch hackers before they gain access to employee computers. Some businesses even have dedicated on-site IT experts. However, all that protection goes away when an employee works remotely. With employees away from the business network and its security safeguards, the attack surface for hackers is increased. When a system compromise is suspected, having off-premises employees can make it difficult for businesses to immediately identify and respond to the threat and prevent further damage.

As cybercriminals actively take advantage of employees working remotely, businesses are at increased risk of losing valuable intellectual property, sensitive data and financial information. And while no cybersecurity solution is foolproof, businesses can better mitigate damage from an incident with a layered approach that includes employee education, industry best practices and cyber liability insurance.

At FastrackCE, we make it easy for insurance professionals like you to maintain current CE licensing requirements so you can continue to serve your clients. When you need us, we can help. For more information, call 800-544-3605 or visit us at fastrackce.com.

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Is COVID-19 a Compensable Workers’ Compensation Disease?

COVID Work Comp ClaimThere is always a risk of an employee getting sick or injured at work, which is why state workers’ compensation insurance systems exist. The employer pays insurance premiums for a workers’ compensation insurance policy that provides employees coverage and benefits for any illness or injury arising out of and occurring in the course of their employment. However, COVID-19 is throwing employers and employees a curveball when it comes to what is and isn’t considered a compensable workers’ compensation claim as it relates to the pandemic.

What’s not covered and exceptions

Influenza and other infectious diseases are not typically covered or accepted under a workers’ compensation claim. In fact, many states specifically exclude disease from workers’ compensation policies. Therefore, an employee who is diagnosed with COVID-19 and unable to work would typically not have a compensable workers’ compensation claim.

However, there are exceptions that can be made for occupations in which the exposure is considered an occupational disease. For coverage to apply under this exception, employees must prove that the disease or illness was contracted within the capacity of their employment, either because they contracted it at the workplace or because it arose out of or was caused by conditions related to the employee’s scope of work. A good example would be a healthcare worker who contracts COVID-19, becomes ill and is unable to work.

The reason for this sticky area in workers’ compensation coverage is that COVID-19 is a highly contagious disease that can easily be spread outside the workplace. Because of this, and because there is typically a delay before symptoms begin, it can be difficult to determine just where the exposure originated. Therefore, the burden is on the employee to prove that the disease was indeed contracted within the scope of his or her employment and as a direct result of being on the job. Whether a claim is compensable will be based on the facts surrounding each individual case, evidence found during the claim investigation and the jurisdiction’s governing law. In some instances, it may even be decided by a court or the state’s workers’ compensation board.

Recent legislation changes in several states

Federal legislation has recently been enacted for disability and unemployment related to COVID-19, and each state applies its own jurisdictional statutes to occupational illness/disease. Individual states should be consulted for specifics as they consider what, when and how COVID-19 might be a compensable claim under workers’ compensation.

In March, Washington and Michigan issued specific directives on workers’ compensation coverage for the quarantine of healthcare workers and first responders. In April, the Illinois Workers’ Compensation Commission approved an emergency rule that guarantees that essential workers diagnosed with COVID-19 are automatically presumed to have contracted the illness at the workplace, even if they’re working remotely or are not currently on the job.

This month, California’s governor essentially flipped the switch and issued Executive Order N-62-20, creating a rebuttal that an employee’s COVID-19-related illness that arises out of the course of employment for workers’ compensation purposes is a compensable claim, but only if the employee tests positive or is diagnosed within 14 days after a day that the employee performed labor or services at his or her place of employment at the employer’s direction. The presumption does not apply if the employee was working from home. In addition, the date of illness must occur between March 19, 2020, and July 5, 2020. For employees who become ill, the Executive Order assumes that any test-confirmed COVID-19 illness is compensable under the employer’s workers’ compensation policy unless otherwise disputed.

This is a challenging time for everyone as we learn how to navigate changes brought about by the COVID-19 pandemic. At FastrackCE, we’re pleased that we can make it easy for you to maintain current CE licensing requirements so you can continue to serve your business clients. When you need us, we’re here to help. For more information, call 800-544-3605 or visit us at fastrackce.com.

Disclaimer: Every claim situation is different, and coverage under a workers’ compensation policy will be based on specific policy language and the facts and circumstances surrounding the evidence of the claim. Policyholders should always refer to the specific language of their insurance contract when determining if they have coverage for a loss.

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Is There Coverage for COVID-19 Claims Under a General Liability Policy? 

General Liability During a PandemicThere is no question that both large and small businesses have been negatively affected by COVID-19. As an insurance professional, you may have already experienced a tsunami of questions from business clients as to how their commercial general liability (GL) is going to help mitigate losses associated with the pandemic.

Today, with many states allowing businesses to begin to slowly open their doors to the public, business owners may wonder what coverage they have under their GL policy should a patron allege that he or she has contracted COVID-19 while at their establishment. The fact is, there are a number of ways a claimant could have been exposed to the coronavirus; therefore, the burden of proof is on the claimant to establish that the business was specifically liable for his or her contracting COVID-19.

Another consideration is whether allegations of people who contracted the virus are considered an occurrence or an accident. In a GL contract, a policy pays for harm for a covered loss caused by an occurrence that is typically defined as an accident – this includes the repeated exposure to harmful conditions. In most normal situations, this most likely wouldn’t be an issue; however, the COVID-19 pandemic is proving to be anything but normal. As a result, whether a business’s liability due to an alleged failure to safeguard patrons from being exposed to COVID-19 was caused by an accident will depend on whether the business owner anticipated the possibility of the claimant’s injury. This can be a gray area, as it could be argued that the business knew there might be a chance that a consumer could be exposed to COVID-19 and therefore, there is no occurrence/accident. *

We are living in unprecedented times and are having to navigate myriad new challenges due to the pandemic. Decisions about how coverage will respond to claims relating to COVID-19 will be made by each insurer and based on the facts of claim, individual policy and applicable laws. As an insurance professional, you play a vital role in helping your clients better understand specific facts about their coverages and ensuring that they have the protection they need.

About FastrackCE

Ensuring continuity in business in the midst of a crisis situation such as the COVID-19 pandemic is vital. At FastrackCE, we make it easy for insurance professionals like you to maintain current continuing education licensing requirements so you can continue to serve your clients. When you need us, we can help. For more information, call 800-544-3605 or visit us at fastrackce.com.

*Whether a claim is covered or denied is based on the facts involved in each particular claim and will play a large role in determining whether a particular COVID-19 illness was caused by an occurrence. Policies and claim situations will differ.

Disclaimer: Every insurance contract must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage will vary depending on the jurisdiction and circumstances. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors.

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Business Interruption and Loss of Use Amid COVID-19: Do Your Clients Have a Covered Loss?

Use of Loss - COVID-19The COVID-19 pandemic is putting businesses through some challenging paces. With mandates requiring the majority of businesses to shut their doors for an unknown period of time, your clients will be looking to their insurance policy to help fund their financial recovery. But COVID-19 is an animal unlike anything the insurance industry has ever experienced. This is raising a number of questions you and your clients may have regarding business interruption and loss of use provisions common to commercial property insurance. Here’s what you need to know.

Breakdown of a business interruption loss

Most commercial business property insurance policies typically include coverage for business interruption losses — including loss of revenue.[i] A basic breakdown of a business interruption claim is net income + continuing expenses + extra expense = business interruption loss claim. A covered claim typically includes a number of expenses related to the interruption of business, such as payroll, taxes and utilities, to name a few.

Are business interruption and loss of use damages related to COVID-19 a covered loss? 

Business interruption insurance covers a loss of income suffered by the insured due to damage to property that is covered under the policy when a covered peril causes a business to suspend its operations. Generally, coverage will be provided if the cause of the property damage is considered a “covered cause of loss,” such as a fire or windstorm, with most policies specifically excluding losses resulting from viruses or bacteria. Therefore, the fundamental question with respect to property insurance coverage for a COVID-19-related loss is whether the presence of the virus can cause or establish property damage. The answer? It depends.

In general, a covered claim for business interruption and loss of use requires some form of physical loss or damage to trigger coverage. However, in the case of the COVID-19 pandemic, coverage may not necessarily require a physical alteration of property if a contingent business interruption insurance policy exists.   As such, loss of use and functionality of the business property could trigger coverage, provided there are no applicable exclusions in the contract. In fact, some state jurisdictions that have held firm that contamination and other incidents that render a business property uninhabitable or otherwise unfit for intended use constitute property damage within the definition of a commercial property insurance policy as a direct physical loss. In addition, policies that are written to include “loss of use” of property that has become uninhabitable or unusable may also extend to COVID-19-related shutdowns.

So what does this mean?

That every claim situation is different, and coverage for business interruption and loss of use as a result of the COVID-19 pandemic will be based on specific policy language and the facts and circumstances of a loss. Policyholders should always refer to the specific language of their insurance contract when determining if they have coverage for a loss.


[i] Policies that don’t include business interruption and loss of use coverage often provide an option to purchase coverage as part of a commercial package policy. Coverage typically is not offered as a standalone policy.


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