COVID-19: Does workers’ compensation insurance cover it for small businesses? [Updated]

The coronavirus pandemic has left many companies out in the cold. Small business owners can struggle to balance social distancing guidelines, stay-at-home mandates, and quarantine orders.

But there’s another impact that many small business owners face: Workers’ compensation COVID-19 claims—will workers’ compensation insurance cover the coronavirus?

The answer isn’t so simple. Ultimately, it depends on your state laws and the industry you operate in. Here’s what you need to know about COVID-19 and workers’ compensation insurance.

Does workers’ compensation cover the coronavirus?

Workers’ compensation insurance protects you, your business, and your staff from accidents in the workplace. If an employee is injured on the job or comes down with an illness, the policy can cover:

• Wage replacement
• Medical treatment
• Other medical expenses
• Rehabilitation costs

However, illnesses must be classified as an “occupational disease” to be covered under your policy.

Is COVID-19 an occupational disease? It might be. Generally, an occupational disease is a condition caused by the work environment. It typically takes longer than a single work shift or workday to develop.

For example, hearing loss is the most common occupational disease, according to the Centers for Disease Control and Prevention.

However, there is some precedent for insurers paying out workers’ comp benefits for diseases unrelated to the work itself. But, it still has to be proven that an employee’s chances of contracting the disease were “materially greater” at the place of employment than among the public.

In the case of the coronavirus, the World Health Organization declared the pandemic a public health emergency. Many people across the U.S. and around the world are contracting and spreading the virus. Given the wide reach of this outbreak, COVID-19 isn’t really a candidate for workers’ comp coverage.

Remember: The major requirement for filing a workers’ comp claim is that the injury or illness be work-related—and it’s very challenging to prove that a team member wouldn’t have been infected with the virus had they not been employed.

So, illness arising from the coronavirus generally isn’t covered by workers’ comp insurance carriers—but a few exceptions exist.

How to know if COVID-19 cases are work-related

Workers’ compensation benefits are for on-the-job injuries and illnesses. In other words, an employee has to be able to prove the illness:

• Occurred in the course and scope of employment
• Was the result of a workplace exposure
• Is a greater risk for their particular line of work

That’s why workers’ compensation coverage isn’t likely to include the coronavirus—employees could get it from COVID-19 patients, coworkers, family members, neighbors, and strangers.

However, some states are expanding workers’ comp coverage for select frontline workers.

For example, first responders in Minnesota qualify for workers’ compensation if they contract the coronavirus without proving exposure happened on the job. In Washington state, the Department of Labor expanded coverage to include first responders and health care workers—and claims from other essential workers are handled on a case-by-case basis.

According to the National Conference of State Legislatures (NCSL), 17 states are pursuing similar workers’ comp coverage for the virus. Visit the NCSL website to see if your state will include workers’ comp coverage of the COVID-19 pandemic.

As some state legislatures and executive orders are waiving the requirement to prove employees were infected on the job, workers’ comp policies may be more inclined to cover the coronavirus in the future—especially for first responders, health care providers, and other front line workers at high-risk of exposure.

Increased workers’ compensation claims during the pandemic

While your insurance company may not cover the coronavirus specifically, your business could see an increase in your claims during the pandemic. Maybe not from COVID-19 exposure, but from other factors that workers’ comp covers.

For example, many small businesses transitioned from in-person work to telecommuting. Managers, supervisors, and owners don’t have the same oversight of an employee’s work environment when they’re working remotely—a situation that can lead to improper use of equipment and injured workers from in-home distractions.

There’s also anxiety and mental stress to consider. About 40% of adults in the U.S. reported symptoms of anxiety or depression during the pandemic. Workers’ compensation laws vary from state to state, but most states provide limited coverage for mental health conditions.

COVID-19 shutdowns, fewer employees, and workers’ comp costs

The pandemic forced many small businesses to close their doors—as many as 1.4 million, according to Oxxford Information Technology Ltd. and reported by the Wall Street Journal. If your small business was among the many impacted by the closures, you could qualify for a refund from your workers’ comp insurer.

Here’s why: How much you pay for workers’ compensation coverage depends on the size of your payroll. If you had fewer employees due to temporary closures or reduced operating capacity, your payroll is likely smaller than it was at the start of your policy.

To know if you might be eligible for a refund:

• Add up your payroll costs since the start of the pandemic.
• Contact your insurance company—they’ll compare the number to the estimate your policy cost is based on.
• If your payroll during the pandemic is sizably lower than the original estimate, you could get a significant refund.

Since you’re calculating payroll costs, now might also be a good time to see if you can get a better rate on overall workers’ comp coverage. Huckleberry makes it easy to calculate your workers’ comp insurance cost. And if you find a rate you like? We’ll even cancel your old policy for you.

Minimizing disruption for your small business

As a small business owner, you’re part of the backbone of the U.S. economy—the 31.7 million small businesses account for 99.9% of U.S. companies, according to the Small Business Administration (SBA).

You, like many other small business owners, have likely felt helpless from the impact of the coronavirus pandemic. In light of the pandemic’s unique challenges, how can you keep your business up and running?

Start by looking for ways to minimize the pandemic’s disruption of your business and staff:

• Prevention
• Telemedicine
• Clear communication

Prevention is the most important step. Existing staff can benefit from a review of best practices, ergonomic positioning to minimize stress and injury, and how to reduce tripping hazards. If you’re hiring new staff, provide proper safety training and orientation—it can reduce the chances of workplace injury.

You may not have control over telemedicine as a business owner. But you can encourage your injured workers to schedule virtual visits as a way to keep appointments while sticking to social distancing guidelines.

Clear communication is helpful throughout the course of employment—workers’ comp is a complex process to navigate in the best of times—but education and transparency about coverage are especially crucial during the coronavirus pandemic. It can ease your employees’ anxiety and (hopefully) make the process smoother for both of you.

Coronavirus and your small business

Will your employees be able to claim workers’ comp if they catch the coronavirus? The short answer: Probably not.

But keep in mind that the COVID-19 outbreak happened quickly—insurers and regulators are still formulating responses. You might see changes to workers’ comp policies that include coronavirus coverage as a work-related illness.

In the meantime, remember that workers' comp protects your business and team in many ways. Also, many clients can require proof of ongoing workers' comp coverage—going without could cost you revenue at a time when you need it most.

Coverage is more affordable than you might think. Get an instant estimate on what you might pay.

Need a workers’ comp estimate? Get it in minutes. Everything is streamlined, online, and at your fingertips.