A recent article published in the Globe & Mail states that many retailers that were forced to close during the height of the coronavirus pandemic may be facing steeply increased liability insurance premiums as they start to reopen. Many of these businesses that were forced to close cancelled their insurance coverage to save operating funds, and are now facing steeply increased insurance costs now that they’re restarting operations.
Canadian insurance companies are considering the risk of viral contagion between staff members and customers in industries with higher levels of personal contact, like nail salons, sports instructors and personal trainers, fitness centres and gyms, daycares, hairdressers, and beauty salons. In fact, some insurance companies have declined to offer policies altogether to some market segments that are considered “high risk”. Other insurers have put exclusions on policies for janitorial service companies and other businesses specifically offering COVID-19 cleanup services. Insurance companies are concerned about the liability that could arise if a customer contracts the coronavirus while on the premises.
Fortunately, the Insurance Bureau of Canada (IBC) says that business liability insurance is typically offered in minimum one-year terms, but if a company cancelled their policy mid-term and then reapplied it’s likely that their insurance rates would be recalculated and could result in a premium increase. Those businesses who maintained their coverage would not be facing any increases until the end of their term at the earliest (provided all other determining factors remained unchanged, such as the size of the business.)
While cancelling insurance is not recommended during a temporary closing, certain professions – like construction contractors, hair dressers and others who could not conduct business online during the shutdown – could not afford to continue coverage, so they cancelled their policies to save money. Now that they are starting to reopen, they’re facing the no-win scenario of doubled insurance costs or the prospect of operating with severely reduced coverage – or no coverage at all. Dominic Clarke, an insurance litigation partner at Blaney McMurtry LLC, said: “One would not be surprised to see that happening. On the other hand, it may be biggest penny-wise, pound-foolish decision that insureds make,” Mr. Clarke said. “There clearly are exposures with opening up … and cutting back on insurance could be the worst decision you could make.”
After months of closings and a lack of regular maintenance, many facilities could be in disrepair and there might be an increased risk of customers, suppliers or any other outside visitors getting hurt on a business’s premises – not only by the possibility of COVID-19 transmission, but by something such as a slip and fall.
Although there is no perfect solution to this problematic situation, some businesses are making strides in developing and implementing “best practices” to minimize both the risk of coronavirus contagion on their premises and to potentially reduce their risk of an insurance premium increase. Following the COVID-19 health and safety requirements issued by your province’s occupational health and safety authority is a good start, but wise businesses are going beyond the bare minimum to protect their staff and their patrons. At the very least, going above and beyond is excellent optics and can help create a sense of safety and trust in the hearts and minds of both customers and staff. Plastic face masks, plexiglas shields between people, and sanitizing mats are all excellent ways to clearly communicate through tangible evidence that your personal service business is working hard to put everybody’s safety and health at the forefront. Taking extra steps to increase the level of health safety in your business can’t guarantee a smaller increase in your liability insurance, but it certainly wouldn’t hurt!
Grizzly Sanitize sanitizing entrance mats are customizable for size and shape to fit your specific business’ needs, and are clearly labeled to let your customers know you’re looking after their safety as they enter your retail store. Contact us today to get a quote for a Grizzly Sanitize solution for your business!