Does My Insurance Cover COVID-19?

Does my insurance cover COVID-19?  Since I’m a lawyer, I’ll give the typical lawyer answer: “That depends.”  It depends on what type of insurance we’re talking about and what your policy says.  Here’s some information to start you off. 

Health insurance – For most people, treatment for the corona virus is covered under your health insurance.  Testing may be something you have to pay extra for, and that’s going to depend on your policy … and whether tests are available.  If you have Medicaid or Medicare, you are covered for testing and treatment.  If you have one of what are called excepted benefit policies, short-term, limited-duration health insurance coverage, and/or health care sharing ministries, your policy probably has significant limitations on coverage and may not provide the same level of coverage as regular health insurance.  Call your insurer to see what’s covered. 

If you don’t have health insurance, the good news for Maryland residents is that the Maryland health connection has a special open enrollment period through April 15 so that you can get health insurance.  The website for the Maryland Health Connection is www.marylandhealthconnection.gov.  If you don’t have health insurance or you have one of these lesser plans, go there and see what’s available for you and your family.

Travel Insurance – Perhaps you purchased travel insurance to cover a trip you had planned to take.  Travel insurance covers things such as medical or major medical coverage while on travel, but it also covers trip cancellations under certain circumstances.  Unfortunately, it usually doesn’t cover known pandemic events, and COVID-19 is now a known pandemic event.  However, if your cancelled trip was scheduled before it became a known pandemic, you may have coverage, and you should check with your insurer regardless. 

Life insurance – Life insurance can protect your family in the event of your death.  There is no pandemic exclusion to life insurance, so your loved ones would be taken care of if you were to pass – provided that you were truthful about your travel plans and exposure to illness during the application process.     

There is more than one type of life insurance.  Term life insurance pays a death benefit if your death comes before the end of the term and generally does not have a cash value.  Permanent life insurance that has a cash value.  It generally features a cash value savings component.  This type of life insurance may be called whole life, universal life insurance, variable universal life insurance, or indexed universal life insurance.  The cash value of these types of policies earns interest and may be available to the policyholder to withdraw or borrow against.  That could be something that gets you through the economic effects of this pandemic until commerce starts back up again. 

The cash component of your life insurance may be tied to the equities markets, which as you know have dropped in value.  Your cash value may be less than it was before.  Most cash-value life insurance, however, includes a guarantee of a minimum rate of return that could exceed current market conditions.  You should check with your insurance agent or your insurer regarding your policy if you plan on accessing some of your policy’s cash value. 

Annuities – The basic premise of an annuity is that you pay the insurance company money, and the insurance company agrees to pay you a monthly sum later.  Annuities can be either immediate – meaning they start paying right away – or deferred – meaning the payments start at some later date.  Deferred annuities can be fixed, variable, or indexed.  Variable annuities are tied to stock indexes or have various mutual funds in them that determines the value of the later payouts – sort of like a 401(k).  Indexed annuities are tied to an index, such as the S&P 500 or the Russell 2000 or a bond fund or the like.  Most annuity contracts have some sort of guarantee that the future or current payments won’t drop below a certain level.  Check with your insurance company or your agent.  Remember that with the markets being so volatile, your values could drop quite a bit, but you will have plenty of time to recover those paper losses unless you were planning on retiring in the very near future.

Unemployment Insurance – If you were laid off because of the virus, you may be eligible for unemployment insurance coverage.  This is done through state government.  So, if you work in Maryland, your coverage comes through Maryland.  If you work in the District, your coverage comes from the District.  If you work in Virginia, your coverage comes from Virginia.  You can find the applications online now. 

Business Interruption Insurance – Business interruption insurance covers a business’s loss of revenue that would have been earned if there was no business interruption.  It typically covers physical loss to property had may have specific exclusions for viral infections.  Contingent business interruption insurance policies protect against losses from supply chain disruptions but may require property damage to trigger coverage.  Cancellation insurance provides coverage for expenses arising from delays, rescheduling, or cancellations due to unforeseen covered events.  Unfortunately, many of these policies also exclude cancellations due to communicable disease. 

General Liability Insurance and Directors and Officers (D&O) Insurance – General liability covers a business’s obligations for property damage or bodily injury.  There could be third-party bodily-injury liability if someone were exposed to COVID-19 because of your business’s negligence.  Unfortunately, many of these policies also exclude liability caused by epidemics or pandemics.  There may also be D&O insurance claims related to COVID-19 if a company didn’t take adequate steps to prevent its spread, have a contingency plan in place, or activate or execute those plans appropriately.  Claims for financial damage to the business or shareholders may be covered. 

Many business insurance policies are tailored to the needs of your business.  Check your policy to see whether your losses are covered.  Communicate with your agent and your insurer. 

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