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Small Business Insurance and COVID-19

How insurance can help small businesses prepare for the challenges of today and tomorrow.

small business insurance

For small business owners, the COVID-19 pandemic has presented an unprecedented trial, filled with questions and uncertainty.

From income loss to remote work and staff furloughs, small businesses have been forced to respond and adapt to this unique situation quickly.

The Coronavirus Aid, Relief and Economic Security or CARES Act has allocated billions of dollars to provide relief for American workers and small businesses amid the outbreak and economic downturn, and established several federal funding programs to aid in recovery. See this guide from the U.S. Chamber of Commerce to learn more. Notably, these loans may be forgiven if borrowers maintain their payroll during the crisis or restore it afterward.

Small and midsize employers can also begin to take advantage of two new refundable payroll tax credits, designed to fully reimburse them for the cost or providing COVID-19-related leave to employees.

But how can your insurance help at this time?

Steven Holland, manager of commercial lines for AAA Insurance, addresses some concerns you might be having right now.

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The question that is top of mind is whether a standard Business Owner Policy will cover business interruption income loss due to COVID-19.

First, the bad news: Small business owners should not anticipate long-term coverage for business income losses.

“Our analysis of policy language on the standard Business Owner Policy Form is there will be little if any coverage for business income loss. If there is coverage found, it likely will be for remediation and/or extra expense coverage,” said Holland.

The good news is that AAA insurance agents have been working with clients to do everything they can to provide adjustments where they normally would not to help keep small business owners afloat.

Holland discussed a case where a customer who owns a restaurant hit particularly hard by COVID-19 called the commercial insurance team to see how he could lower his insurance cost.  “We reached out to the workers’ compensation carrier on his behalf to advise that the payroll for this client would be much less this year. The carrier did a mid-policy term adjustment saving the customer thousands … We also were able to set up a pay-as-you-go billing so that there will be no surprises at the time of policy audit.”

Restaurants, contractors, landscapers and electricians are among the top customers working with the AAA insurance team to protect their businesses. Now and always the priority of the agents is to shop their over 23 carriers for the best rate.

small business insurance

About Business Insurance

All businesses are required to have insurance. The protection you need depends on the industry that you are in. Small business insurance or commercial insurance is designed for field-specific risks. For example, landscapers and contractors must consider work-related injuries and coverage for any vehicles and equipment used for work, while a restaurant owner would also need to worry about commercial property.

The essential coverage for businesses is General Liability. This covers basic business risks and protects against third-party claims such as bodily injury or property damage.

Professional Liability will protect a business if a client believes they suffered a financial loss due to an error or omission on your part.

A Business Owner Policy packages all the above, as well as Business Interruption, into one. Business Interruption covers revenue losses in case of a disaster, specifically, if the damage of physical assets such as machinery or vehicles are cause for a loss of revenue. There is a lot of fine print and exclusions involved with Business Interruption, and it does not include income loss due to a pause in business caused by COVID-19.

Other type of small business insurance coverage includes Workers Compensation (mandatory in many states, to cover employee’s lost wages and medical treatment if they suffer a work-related injury or disease, Cyber Liability to protect from cyber attacks and data beaches and Commercial Auto.

The AAA small business insurance team serves as a trusted advisor to thousands of small businesses in the Northeast. Schedule a call to speak with one of our commercial experts to see how they can help your business.

For more information and resources for small business, go to uschamber.com/co.


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