Going Viral: Insurance for Ebola and Other Pandemic Outbreaks

Companies face significant business risks from contagious outbreak. Interruptions in supply arrangements, restrictions on travel, employee downtime, and potential liabilities for infecting third parties are just a few of the risks plaguing business. From Legionnaire’s disease to avian flu, H1N1 to Ebola, businesses and institutions have suffered repeated dislocations and disruptions because of infectious diseases. But as we know, businesses are not defenseless. Companies can and should plan proactively to address disease-related risks. They should:

• Turn a critical eye to their own operations and make an inventory of risks potentially implicated by pandemic exposures.
• Review all existing and proposed insurance policies to ensure that they are drafted to provide maximum coverage for pandemic-related losses.
• Consider whether they stand to benefit from specific, stand-alone policies for business interruption and supply chain risks.
• Implement protocols to institutionalize rapid information gathering and appropriate communications at the first sign of a potential claim, ensuring that internal and external stakeholders are appropriately informed and that a panic situation does not emerge.

Businesses are not always aware of the range of insurance policies that may be available to mitigate their exposures. Insurance is available against a host of disease-related risks. It is possible to insure against business interruption, supply chain interruption, and even, to a limited extent, loss of customer traffic. Contingent business interruption insurance specifically covers business interruption losses resulting from physical damage to property at the premises of a supplier, customer, or other business partner of the insured, potentially offering coverage when viruses or bacteria invade business premises, such as through HVAC systems. Even better, supply-chain insurance covers economic losses and increased operating costs stemming from an event disruption the insured’s normal business operations—and does not necessarily require property damage. (Depending on how a disease is transmitted, these differences in coverage can be important. For example, while Legionnaire’s disease finds a home in moisture within building HVAC systems, resulting in contamination that arguably constitutes property damage, Ebola is only spread through bodily transmission.)

In extreme situations, the civil authority coverage of business interruption policies is available to cover losses when government orders closure of a business or its surrounding area. In addition, as in the recent case of a nurse who claimed to contract Ebola from exposure in a Dallas hospital, liability insurance may come into play. Finally, for employee workplace exposures, employers should be sensitive to the requirements for coverage under workers’ compensation policies.

Fear, like other infections, is contagious. But it needn’t be. Proactive planning and a well thought out insurance program are sound medicine to help your business avoid the contagion.