News & Insights

Business risks and insurance in the face of coronavirus

Published 06 March 2020
Last updated: 12 March 2020 at 10:30am

As news headlines about the coronavirus disease (COVID-19) continue to increase, so has concern over its potential to affect employee welfare, disrupt supply chains, slow business operations and impact business confidence. Businesses should take proactive measures now to review key insurance policies and business continuity plans. Here’s an outline of key considerations.

Business insurance policies that may be relevant

While specific policies for business loss due to an infectious disease outbreak are uncommon, we strongly recommend you contact your insurance broker to check what key coverages may apply to cover loss relating to an infectious disease outbreak. There are a range of business insurances related to risks that may occur in an outbreak situation, and this information is to provide general information to aid understanding.

Corporate travel insurance

What it typically covers

  • Cancellations due to unexpected factors outside your control* i.e factors that are "not a known event"medical expenses for illnesses contracted while visiting destinations not subject to government travel advice
  • Cancellation if government advice is subsequently issued advising "do not travel"*
  • Medical costs if government advice is subsequently issued under some policies
  • Additional travel expenses if an outbreak occurs, government advice is issued and you are compelled to leave immediately or put into quarantine are likely to be covered

* It is important to note that many insurers have already deemed the COVID-19 outbreak as a “known event” and it is expected that all insurers will shortly do the same. This could mean any travel booked after the event was deemed to have been a known event may not be covered for COVID-19 related losses. Please check with your insurance broker what your insurers' response to COVID-19 is.

What it doesn’t cover

  • travelling to a destination which is the subject of government ‘do not travel’ advice before departure
  • deciding not to travel when no government warning about the destination is in place
  • cancellations by the tour operator due to insufficient bookings
  • cancellation and additional expenses where the cause of the loss is as a result of a known event

Because general insurers are responding in different ways

  • Review your corporate travel insurance terms
  • Understand your insurer’s response to the coronavirus with the support of your insurance broker
  • Be aware of Government Travel advice
  • Seek reimbursement from your travel agent/airline before making an insurance claim

Workers’ compensation insurance

What it typically covers

  • Lost income and costs if a worker contracts an infectious disease in the course of their employment

What it doesn’t cover

  • People putting themselves at risk through serious and wilful misconduct

Ask your insurance broker about the terms of eligibility in your state.


Public liability insurance in relation to shared open spaces

What it typically covers

  • Protects the owner or operator for legal liability to pay compensation to a third party in respect of injury, including defence costs. The definition of ‘injury’ can vary from policy to policy and may include infectious disease or illness

Check with your insurance broker if your policy has a special clause that covers disease and illness, how this might apply in terms of preventative protocols and whether coronavirus might be considered a known risk.


Management liability and directors and officers’ liability insurance

What would likely be covered

  • Legal costs involved in responding to claims for damages (or other relief), resulting from negligence or errors and omissions by senior managers or executives in carrying out their duties. This includes work health and safety breaches

What they don’t cover


  • Awards for sickness and bodily injury are typically not covered


Ask your insurance broker about the extent of bodily injury exclusions which can vary from policy to policy.

Business interruption insurance

What it typically covers

  • Interruptions to normal business operations caused by prevention of access to the premises or damage to the business premises or adjoining property

What it typically doesn’t cover

  • Delays or interruptions caused by outbreaks of disease at overseas or local locations, or disruption due to an outbreak of an infectious disease notifiable under the Biosecurity Act 2015 (Cth)

Some very specific policies may contain terms that could allow for a claim under certain conditions, so check with your insurance broker.

Cancellation or abandonment of events insurance

What it typically covers

  • Cancellations of events due to various impacts, including closure by a public authority or a ban on public meetings and events because of the threat of communicable (ie. infectious) diseases

What it typically doesn’t cover

  • If the event organiser decides to cancel out of fear of infectious disease or reduction in attendance

Check with your insurance broker if communicable (ie. infectious) diseases are included under your policy.


Marine cargo insurance for goods in transit

What it typically covers


  • The majority of the word’s trade is insured on conditions similar to those noted in the Institute Cargo Clauses (A). Institute Cargo Clauses (A) covers physical loss of, or damage to, the insured goods

What it typically doesn't cover



  • A policy may not support a claim unless there is physical loss or damage. Certain risks are specifically excluded unless there is a supplementary clause that allows for them. These exclusions include delay that may occur due to quarantine and additional shipping costs and surcharges that do not form part of a physical loss or damage claim


Actions your business can take now

1. Review your business continuity plan

Having a business continuity plan is essential to dealing with disruption. You also need to consider the effects of the virus spreading, including

  • the steps to take if an employee is affected
  • protocols for employees at risk of infection from recent travel or contacts
  • accommodating those who don’t feel safe commuting by public transport or working in a communal workspace
  • allowing for people dealing with schools or childcare closures. 

Identify the critical people, processes and technologies that could have the biggest negative impact on your business and create recovery strategies to minimise disruption. This could include

  • outsourcing
  • reconfiguring the physical workspace
  • commuting options for employees
  • supporting flexible working arrangements
  • working with your supply chain partners to ensure you have a back-up plan should there be a breakdown along the line. This may involve increasing inventory levels if your business provides products/services of need in relation to the situation.


2. Prepare your workspace

Under Work Health and Safety legislation, employers are required to take all reasonably practicable steps to protect their employees. Measures to ensure the health and safety of employees at work should be incorporated into your approach and also future business continuity planning.

Review your workplace for potential points of transmission of infection such as shared desks and telephones, conference rooms and common areas. Coronavirus is thought to be transmitted through droplet infection (saliva or coughing or sneezing) but may also be airborne.

Advisable actions prepared by the World Health Organization include

  • increasing the frequency of office cleanings, especially of work surfaces and keyboards
  • providing personal hygiene products like hand sanitiser, especially in co-sharing work places
  • reviewing your work-from-home policy
  • encouraging people not to come to work if they’re experiencing related or indicative symptoms, or if the virus starts spreading in your area.

Other suggestions from WorkSafe Victoria include

  • using telephone and video conferencing facilities where possible to minimise close contact
  • utilising alternative work options, including work from home.

Have a plan for what to do if one of your people is diagnosed with the virus or if there is an emergency.


3. Educate and communicate with your employees

Businesses have a duty of care in regard to their employees. Decisions around avoiding risk of infection should be based on reliable information sources and governmental directions, with a view to protecting your clients, customers, staff – and their families – from exposure.

Work health and safety legislation also requires employees to cooperate with their employer in implementing risk control measures to avoid creating or increasing a risk to the health and safety of themselves or others.

Employers must consult with employees when assessing risks and in their approach to protecting their health and safety. Involvement of health and safety representatives or committees is an inclusive way to meet this obligation.   

Employees should also be provided with current information and actions they can take in and outside the workplace to help control risks. An individual’s judgment about their safety at work and associated anxiety will be influenced by the quality of information they receive from their employer.

Ensure that employee assistance programs are well communicated to help people manage any related stresses. You can also access Department of Health advice on the coronavirus.


4. Record the financial impacts on your business

From the time you become aware of a potential effect on your business, proactively document a clear chain of cause and effect between operational impacts of and the costs incurred during this duration.

It’s also worth keeping records of the costs involved with expediency measures such as

  • treating or disinfecting received goods
  • sourcing alternative suppliers
  • extra time involved in compensating for shortfalls
  • running damage limitation with customers, clients and business partners.

5. Stay informed

As this coronavirus is a rapidly evolving situation, stay alert for updates and advice via reputable news sources and relevant authorities so you can be prepared to meet changing conditions, as well as managing communication with your employees and mitigating the spread of disease.

Our experts are here to support you in the development and implementation of risk management policies and procedures during a crisis or outbreak.


Connect with an expert


Useful resources

Gallagher COVID-19 pandemic resource centre 

Smartraveller News and Updates: coronavirus (COVID-19)

WHO International: Coronavirus getting workplace ready for COVID-19

Worksafe Victoria: Preparing pandemic guide for employers

Protecting your business against the spread of coronavirus

To the extent that any material in this document may be considered advice, it does not take into account your objectives, needs or financial situation. You should consider whether the advice is appropriate for you and review any relevant Product Disclosure Statement and policy wording before taking out an insurance policy.
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