As the COVID-19 disease continues to spread, we understand that Michigan’s farmers may have questions and concerns. They want to know what this means for their business operations, workers, and family. We get it. One of the biggest questions our farmers have is whether Property Casualty insurance policies provide coverage for the financial and health losses individuals and businesses are sustaining.
In general, there is no Property Casualty coverage for the impact of the Coronavirus. To help in the understanding of relevant coverages which some farmers may have questions about, we’ve provided a brief summary of them. Farmers with specific questions about their policy are encouraged to call their local Farm Bureau Insurance agent.
Workers Compensation - No coverage. A disease which the public is exposed to outside of the course of employment is not a compensable injury, according to Section 418.401(2) of the Workers Compensation Act.
Homeowners - No coverage. Bodily Injury and Med-Pay coverages exclude coverage for loss caused by transmission of a communicable disease. Because a COVID-19 infection is not direct physical damage, there is also no property loss coverage.
Guardian - No coverage. Guardian has a communicable disease exclusion in the base policy. A COVID-19 infection would also not meet the definition of an occurrence. Because a COVID-19 infection is not direct physical damage, there is also no property loss or business interruption coverage.
Commercial Packaged Policies (CPP) & General Liability – Because a COVID-19 infection is not direct physical damage, there is no property loss or business interruption coverage, except for specific coverage under food contamination through the Select Endorsement. This endorsement provides up to $25K of clean-up/business interruption coverage if an executive order requires closure, resulting from the communicable disease of an employee.
A COVID-19 infection would also not meet the definition of an occurrence. In addition, many CPP policies have a specific Communicable Disease Exclusion.
Farmowners – Limited food contamination coverage may be covered in the event the premises is ordered closed by the Board of Health or other governmental authority. In August 2019, Farm Bureau Insurance added coverage in the base policy for product withdrawal expense, food contamination expenses, and lost business income due to such events. Several of the protector endorsements provide higher levels of coverage (from $25K to $50K). Otherwise Farm Liability contains an exclusion for loss caused by transmission of a communicable disease.
Because a COVID-19 infection is not direct physical damage, there is no property loss coverage. Furthermore, livestock is covered on a named peril basis which would not include COVID-19.
Pollution – No coverage. COVID-19 is not a pollutant and therefore is not covered.
All in all, there is minimal coverage when it comes to insurance policies and COVID-19. At Farm Bureau Insurance, we want you to know that now, more than ever, farmers will be viewed as the ultimate providers, growing the food and fiber we have and always will depend on. This year we’ll all sow the seeds with hope and pray to reap that bountiful harvest our country is depending on.