Business insurance is normally purchased by a business owner in order to protect the business from specific losses. These might include natural disasters like earthquakes and floods. They might also include violence by an employee or customer. They might include protection for infestation. Any of these protections arise because the business loses profit when it is forced to close.
Many business owners discovered that COVID-19 was not among those protections. Most plans did not cover losses that arose when the businesses were forced to close. Owners could still rely on government subsidies, but these were slow to roll out and only helped mitigate losses rather than eliminate them.
Many business owners ended up in court, but judges routinely sided with insurers. The good news? On either side, most people won’t make the same mistake twice. Insurers are making it clear to those purchasing business insurance that the business will require protections against specific public health issues to avoid the same pitfalls that arose during the pandemic — and because the pandemic is ongoing, this insurance is limited. It’s harder to acquire health insurance when a person is already sick, for example.
Even so, several states have already introduced legislation that would force insurers to cover COVID-19 losses. This trend is similar to what occurred after 9/11 when insurers began offering business protections due to terrorism in response to public and private criticism. What will the federal government do? Right now, we’re not sure. But Democrats are in power, and they support people over business. They might not have time to get anything substantial done before 2022, though, when the power could vanish.
One aspect of business insurance that changed more than expected? Protecting business assets in the digital space versus the brick and mortar one. Many employees are still working from home even now, late into 2021. Many business owners have no intention of bringing them back — or are simply waiting for business insurance to make it worthwhile. Without a brick and mortar space to protect, policyholders have less incentive to purchase or upgrade a plan. In fact, they might have more incentive to throw it in the trash.
It’s worth mentioning that insurers have responded to these changes by employing new technology. These new methods include more streamlined customer data analytic tech, or integrating information across multiple platforms like mobile and website with a call center. This saves insurers money.
This is in line with what business owners are already doing. For example, policyholders already showed an interest in downsizing through automation — but the 2020 pandemic jumpstarted this transition. During the pandemic, business owners discovered new opportunities to sell goods and services to online consumers who weren’t already a part of the market.
Do you need to change or alter your business insurance? You should consult with a qualified lawyer first. Additional information is available on www.sederlaw.com.
This is an example of a news cycle during the height of the pandemic in 2020, when many were promoting the fear that insurers could be put out of business if courts sided with entrepreneurs: