The truth is insurance companies only insure what they can understand, model, and predict.

Carriers that offer life insurance know how many people will pass away in a given month and can set rates and payouts based on that. Carriers that offer auto insurance know how many accidents the average 16-year-old will have in their first year of driving, so they know the risk they’re taking and what to charge.

These risks have premiums set by underwriters based on statistics that insurance companies have refined to a predictive science. The problem with a pandemic is that insurance companies don’t have enough data to predict what a pandemic will do and no way of knowing how far an illness will spread or if a cure or vaccine will be found. Also, unlike an event like a hurricane or earthquake which is limited to a certain geographic area, the Novel Coronavirus is literally spreading worldwide. Insurance companies don’t have a model and or data to predict what the Novel Coronavirus will do so they conservatively decline to cover the losses. No data, no model, and no prediction mean no coverage offered.

Proactive Measures Against Coronavirus

Despite the lack of insurance coverage, you can take proactive steps to protect your business from the potential effects of a pandemic. If you can’t move the risk to the insurance company, the best course of action is the dual approach of prevention and mitigation. Aside from personal safeguards you can take to protect your own health (such as frequently washing your hands and limiting your physical proximity to others), you, as a business owner, can reduce your business’ exposure to the impacts of Novel Coronavirus with the following actions:

1. Make sure your team is set up for telecommuting. If you must close your office, enabling your team to work from home will allow most functions to continue. Remember that even if you don’t have to close your office, if your employees’ children’s schools are closed, it will have the same effect.
    
2. Order a surplus of your company’s daily operational supplies. From raw materials to toilet paper, supply chain interruptions from any number of sources such as factory shutdowns or freeze on imports will make these essential resources in short supply.
    
3. Take your credit line now. With the market drop last week, it may not be long before banks are reducing or eliminating credit lines. Remember, in 2008, even companies with great banking relationships and solid balance sheets saw their credit lines eliminated or reduced amid the financial market panic.
    
4. Pay attention to what others in your industry are doing. You definitely don’t want to be the company that does less than your competitors, and customers will expect what they see others doing from you. It’s likely that authorities won’t issue specific guidance for every type of business, so benchmark your approach with those in your space.
    
5. Ensure your HR department follows best practices available from resources like OSHA.gov or the CDC on how to mitigate germs and address contagious team members on site. Even if everyone in your office is completely healthy, employees will want to see you take this risk seriously.
    
6. Remember that requiring an employee to stay home could have ramifications if that employee loses income as a result. It’s the prudent thing to do, but check with your HR department or labor counsel to make sure you don’t end up in legal hot water.
    
7. Educate your employees on your company’s policies and procedures on reporting to work while ill, especially in this potential crisis. It’s never a good idea to come to work sick, but employees must be educated to stay home if they exhibit any symptoms consistent with the Novel Coronavirus (or any communicable illness for that matter).
    
8. Cross-train your essential functions. Can you afford for your only bookkeeper to be out for a week? Cross-train employees now so you can continue to operate your business, even if any given employee is out sick for a significant amount of time.
    
9. Follow federal, state, and local employment laws when it comes to paid time off, sending people home, requiring remote working, etc. Sometimes doing what feels right may come back to be an issue once the crisis has passed.
    
10. Consider financial protections from insurance policies that may come into play with the virus, even if they don’t help you in the near-term:
     
11. If, for instance, an employee accuses your company of allowing sick people to work which caused others to get sick, that could be an employment suit to which employment practices insurance could apply.
     
12. Imagine an employee claims they got sick at your workplace and can’t work as a result. That could potentially be a workers’ compensation claim.
     
13. Did you close your business too quickly as a result of the virus or not quickly enough? When the dust settles, hindsight will be 20/20, and for larger companies, investor litigation could follow in regards to executive decisions made now. Directors and officer’s insurance is going to play a big role in protecting executives.
     
14. If the virus could pose a problem to your operation, alert your customers and team members sooner rather than later. This way your company is seen as managing the problem proactively instead of getting caught off guard.
     
15. Have an operational plan B. If you get all your widgets from one factory in one geographical location, now would be a good time to see what alternatives exist.
     
16. Communicate with your team. If your business is going to be closed for an extended period of time, your employees need to know right away so they can start planning.