The Insurance Risks Involved with Reopening Your Business

April 29, 2020
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Businesses may be finding themselves stuck between a rock and hard place. Those that stay closed will struggle with lost income. Those that open too quickly may face the possibility of coronavirus outbreaks and associated legal issues. As governments announce plans to reopen, businesses will have to consider the risk management implications carefully.

The Debates Rages On

President Trump recently unveiled the Guidelines for Opening Up American Again. The guidelines include criteria that state and local governments can use as they go through the three phases for reopening their economies.

Several governors have already announced plans to reopen their states. According to CNN, Georgia, South Carolina and Tennessee have announced plans to loosen restrictions and restart their economies. The mayor of Las Vegas has also called for the city to reopen even though, in an interview with CNN’s Anderson Cooper, she said that she would not provide social distancing guidelines and that such decisions would be up to the business owners.

Not everyone agrees that this is the right course of action. According to the Los Angeles Times, top federal health officials have warned that reopening too soon could result in new outbreaks of COVID-19.

The Risks of Reopening

Social distancing efforts have come as a major blow to many businesses. But if businesses reopen and a surge of COVID-19 cases follows, those businesses could face dire consequences.

The U.S. Chamber of Commerce has warned about the potential liability issues that businesses could face. If an outbreak is traced to a company, the company could be sued for exposure liability. Companies that take measures to protect workers could also be hit with claims, such as discrimination against high-risk workers or privacy violations. High-risk workers may also sue if they believe they haven’t been given reasonable accommodations, if they think their employer has created an unsafe workplace by failing to provide personal protective equipment, or if they’re not compensated for time spent in health screenings.

Businesses could also face a surge in workers’ compensation claims. According to the Los Angeles Times, the largest workers’ compensation insurer in California recently lifted the requirement that essential workers with COVID-19 prove they were infected at work. This should make it much easier for workers to file successful claims.

At the same time, Claims Journal is warning about a possible rise in D&O and securities claims related to COVID-19.  Directors and officers may be held accountable for the decisions and claims they make regarding the outbreak, for example, or if their mismanagement causes stock prices to drop.

Some COVID-19 lawsuits have already occurred. According to CBS, a lawsuit against Walmart alleges that the managers ignored the symptoms of a worker who then died and COVID-19 and failed to let coworkers know about the possible exposure. CBS also reports that passengers are suing Carnival-owned cruise lines over claims that the management and crew members knowingly exposed passengers to COVID-19.

Resources for Businesses

The risks are greater than ever. Eventually, businesses will have to reopen in order to survive. This still leaves many questions as to when and how the reopening should occur. As businesses make decisions to open again, they should refer to their state and local orders, as well as the following guidance:

Also, please be sure to check Heffernan Insurance Brokers’ COVID-19 Resource page