All the following insurance questions have been answered by our insurance professional Dale Wittick, CPCU who has his Bachelor’s Degree in Risk Management and 30 years of experience working within the insurance industry. Dale Wittick owns PEEP Insurance.
Some questions we’re getting:
1. Q: With all the cancellations happening due to the virus, does the virus fall under the act of god clause, which is sometimes a line item in insurance policies.
Dale Wittick: The transfer of a communicable disease such as the flu is not an ‘Act of God’. Humans spread the flu all the time all over the world. The sole reason this flu strain is pandemic is because scientists have not yet created a vaccine. The first samples of a vaccine for this virus is being tested on humans this week.
2. Q: As on lawyer has pointed out – it sounds like the non-performance is mostly going to fall into the ‘impossible to perform’ segment, not due to the virus itself, but to government sanctions / lockdowns.
“This doctrine may also excuse the performance of a contract if, for example, the subject matter of the contract or means to perform the contract have been destroyed or are impossible to perform.”
Dale Wittick: The CDC announced today, 3/16/2020, that it is suggesting that events of more than 50 people should be rescheduled to be held after 8 weeks. I surely believe the government, local and/or national, will announce specific guidelines within the next couple days.
3. Q: I heard from a reputable source that businesses making loss claims due to the virus (to their insurance) are being denied because it is a pathogen and not an “Act of God”. I’d suspect event insurance (what some brides buy) might also take that same hard line? So far I have offered to reschedule or refund 4 events, but it hasn’t impacted a wedding… yet.
Dale Wittick: A business income loss is triggered by:
- The real property of an insured, (Buildings & Contents) must be subject to a covered loss to trigger coverage. A covered peril must occur such as a fire, smoke damage, aircraft collision, automobile collision, explosion, collapse of building, water damage caused by discharge of a sprinkler system, or hot water heater or plumbing or HVAC System, entrance of a building blocked by a covered peril causing blocked entry of an entrance way, and other such perils which cause property damage to an insureds building or contents.
- A virus does not trigger any of the required events to activate business income coverage because no property was damaged nor utility interrupted.”
4. Q: I am curious, if insurance companies aren’t required to cover pandemics, why are companies expected to refund?
Dale Wittick: An insurance policy provides coverage for third party general liability claims and property claims when caused by covered causes of loss such as equipment being damaged or stolen from where it was secured with signs of forced entry.
If a gig is cancelled the contract in place between the two parties will determine the amount of deposit returned to the party cancelling the event.
5. Q: What do the insurance companies consider an act of god?
Dale Wittick: An ‘Act of God’ is sudden, unexpected event that can’t be controlled or protected against. Act of God insurance refers to any kind of insurance that protects against these events. For homeowners insurance, you’re protected against some acts of God, such as wind, with a standard policy, while others, like flooding, require a special endorsement.”
6. A conversation:
a: My client told me that event insurance does not cover pandemic outbreaks
B: There are some that do, but even without it, it’s still good business on our part to get them to buy it. I guess if you never have events cancel, then maybe it’s not worth it, but I am seeing a lot of DJs always posting about events getting cancelled before covid-19.
C: MOST Event Insurance policies have so many exemptions that they will never pay off except in extreme cases. That is why the premiums are so low.
Dale Wittick: Special Event policies have different coverages and exclusions across all insurance companies that offer them. That is why the pricing varies so greatly. I would strongly recommend documenting in writing what the insured wants and expects to be covered and their insurance broker responding in writing prior to a purchase. Insurance professionals never want to have a client buy a policy and find out there is no coverage for a cause of loss the client thought was covered.
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