Protect & Defend columnist Ed Branam, DVM, is the veterinary and animal services program manager at Safehold Special Risk Inc. A 1977 graduate of the Michigan State University College of Veterinary Medicine, Dr. Branam has worked in the insurance industry for the past 20 years. He is a former Sacramento, California, veterinarian and a former veterinary affairs manager with Hill’s Pet Nutrition.Read Articles Written by Ed Branam
As the pandemic sweeps across the United States, the delivery of veterinary services has changed dramatically. Not surprisingly, veterinarians and practice managers have raised questions about insurance coverage and risk management. This is the first of a two-article series highlighting the most frequently asked questions I have received from my insurance clients.
Q. Do workers’ compensation insurance policies respond to an employee who claims to have been infected with COVID-19 while working at the practice?
A. Virtually all workers’ compensation policies exclude coverage for bacterial and viral infections contracted at work. That said, in response to the pandemic, several states enacted or are considering legislation addressing the exclusion, especially as it pertains to employees classified as essential workers. Therefore, check with your state insurance department, your broker or your insurance company to determine coverage eligibility.
If unsure, you can always file a workers’ compensation claim on the employee’s behalf. Your insurer’s claims department will notify you in writing with a detailed explanation of why the claim was accepted or denied.
Q. Does business income coverage respond to the loss of revenue due to COVID-19?
A. Business property and liability policies typically cover some degree of lost income after a covered event in which normal operations are disrupted. Examples include fire, vandalism, pipe breakage and, with some policies, natural disasters.
Business income coverage has two major issues with regard to COVID-19. The language in most policies specifically states that viruses, bacteria and other microorganisms that cause physical distress, illness or disease are excluded. Thus, if COVID-19 is not a covered cause of loss, business income insurance does not apply.
The disruption of normal business operations must be caused by the direct physical loss of or damage to property that alters the physical integrity of the property. Since bacteria and viruses such as the novel coronavirus do not result in direct physical damage or alter the integrity of the policyholder’s property, the policy would not respond even if viruses were not specifically excluded.
Nevertheless, the federal government and several states are considering legislation addressing these exclusions. Likewise, several lawsuits have been filed that challenge the insurance industry’s interpretation of the physical property exclusion for the COVID virus.
Once again, you can always file a claim. Your insurer’s claims department will notify you in writing with a detailed explanation of the company’s decision.
Q. My practice has provided concierge service for pet owners since the outbreak began. How do we ensure that the hospital is covered if an animal escapes while we are transporting it between the client’s vehicle and our building?
A. Animal bailee insurance provides financial and legal assistance when an adverse event occurs to an animal while in the practice’s care, custody or control. However, all animal bailee policies are not alike.
Here are the recommended coverage features you should look for:
- No per-animal sublimit: Animal bailee policies often provide adequate annual coverage but have a per-animal limit. For example, a policy might have a $50,000 annual limit but cover only $1,000 per animal. Since the replacement value of individual animals can vary significantly, the best way to ensure you have sufficient coverage is to select a policy that does not include a per-animal sublimit.
- Ancillary replacement costs: This covers ancillary expenses beyond the purchase price of a new animal, such as exams, vaccines, deworming, sterilization and behavior training.
- Search expenses: Your policy should cover the cost of advertising and any rewards designed to assist in finding escaped animals.
Other considerations should include:
- Per-incident coverage limits: Some animal bailee policies not only have a restrictive per-animal sublimit but also a per-incident sublimit regardless of how many animals are affected. Look for a policy with no per-incident sublimit.
- Annual coverage limits: This should be viewed as your catastrophic event cap. I recommend that a veterinary clinic’s annual limit cover a scenario in which a complete loss of animal life occurs when all cages and runs are occupied.
- Preservation expenses: Ask whether your insurer will pay to move animals in your care, custody or control to preserve their safety and well-being.
- Uncollectible expenses: One nice feature in some animal bailee policies is reimbursement for accrued charges not collected from a client because of an animal’s loss while in your care, custody or control.
- In-transit coverage: Make sure your animal bailee coverage is not limited to animals on your insured premises. Coverage should extend to animals in transit. Also, select a policy that does not have an in-transit sublimit.
Q. We are considering instituting telemedicine. Do veterinary professional liability policies cover the use of telemedicine? What about license defense?
A. As a result of the COVID-19 crisis, the delivery of telehealth services such as telemedicine, teletriage, teleconsulting and telemonitoring are rapidly becoming alternative health care delivery options. Unfortunately, the degree of services approved by individual states lacks consensus. The good news is that professional liability and license defense policies cover legal telehealth services, though individual policies might vary.
That said, keep in mind that professional liability and license defense policies respond only to errors and omissions related to the delivery of veterinary services and explicitly exclude coverage for criminal acts and the violation of any statute or government regulation. Therefore, you need to follow your state’s regulatory guidelines and understand your insurance company’s position on telemedicine and other telehealth services.
Q. In the current COVID environment, I am concerned about additional liability exposures. How do I further protect my practice?
A. An umbrella or excess liability policy provides protection beyond the limits of your primary liability policy. Examples include, but are not limited to, coverage limits involving general liability, hired and non-owned auto, business auto and, in some instances, professional liability. Standard business liability insurance policies typically have limits of $1 million or $2 million per occurrence and $2 million or $4 million in annual primary liability coverage. An umbrella or excess liability policy usually offers additional coverage in $1 million increments.