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Bank Insurance and the Corona Virus

Just in case you hadn’t had enough articles on how the Corona Virus (Covid19) will effect your bank and your life, let me present you with one more. The insurance industry is just as confused as the rest of us as to how to respond to this “crisis”.  Insurance periodicals and websites have been dealing with such questions as: Can a virus (communicable disease) be the direct cause of physical damage to property or bodily injury to others? Are the medical expenses caused by a disease covered by Workers Compensation or just Health insurance? Will the increases in cash kept at bank branch offices and ATMs be covered by the Financial Institution Bond? Let’s address these questions as they pertain to your bank.

It is difficult to imagine how an illness could physically damage property, unless you consider the possible extra expenses that might be incurred by separating employees from the workplace or other related expenses. If it can be construed that an illness is a “direct peril”, then, in the absence of an exclusion, coverage, at least, needs to be considered. The industry is still pondering this question. Bodily injury or more precisely Bodily Injury Liability is another matter altogether. It would certainly seem feasible that a bank customer might accuse the bank of giving them the virus through one of the bank’s employees. Unless there is an exclusion to the contrary, the bank’s General Liability coverage should respond to such coverage. Unfortunately, several years ago one insurance company came out with a “Communicable Disease Exclusion” to combat the threat of the Ebola virus. Though this exclusion is rare, it is important to make sure your bank does not have it.

Also, if your policy is “location specific” and you now have employees working from home, you need to make sure that the General Liability coverage will extend to the employee’s home as well. Your insurance agent should be able to confirm coverage or endorse your policy to cover such areas.

The coverage of medical expenses suffered by bank employees from this virus depends on where the virus was contracted. If the employee contracted the disease from another employee while in the course of his/her employment, it would appear the Workers Compensation policy should respond. However, if contracted outside of employment then it should be covered by health insurance. However, determining when and where someone contracted a disease can be problematic.

What about the increase in cash on hand banks are keeping in response to the demand by the public? It is the rare case indeed where the cash in any one branch or main office of a bank would exceed the limit of the Bond. Remember the limit of the Bond applies to each and every loss situation. The total cash for the main office AND the branches may be more than the Bond limit, but the loss is rare, indeed, that involves all locations at the same time. However, should the bank believe that the cash on hand at any one branch or office will exceed their bond limit, it is a simple matter of increasing the Clause B limit (burglary and robbery) to the amount needed.

ATM cash increases would follow the same logic. The ATM limit on the Financial Institution Bond applies to each and every bank ATM. This limit should be the largest cash kept in any one ATM overnight. Should any one ATM cash on hand exceed the ATM limit, it is simply a matter of increasing this limit accordingly.

However, it is still a good idea to let your Bond Insurance Company know of these increases, and how long you think it will be before the limits are brought back to normal.

This is a unique situation we all find ourselves in. We should not automatically assume that a loss cause by the Corona Virus is not covered by insurance, NOR that it is. With the possible exception of the rare “communicable disease exclusion”, I’m not aware of any exclusion or policy condition that would restrict or exclude coverage on any standard bank insurance policy.  Careful consideration of each loss situation and reporting any significant loss to your insurance company is certainly a good idea.

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