Bed Bugs!

Matt Slakoff, CIC, CRIS
We all hear the stories on the news about bed bug infestations.  The thought makes most people start itching and want to run to the shower!  If you want to see how pervasive and widespread the risk is, just Google “bed bugs” in the news section. There are infestations in hotels, apartments, city buildings, offices, Airbnb…the list goes on and on.

What most people don’t realize, however, is how costly the problem can be.  Most public places are at risk for exposure. These infestations not only create property damage, they create bodily injury hazard to employees and any third-parties who visit those properties. The potential liability costs range from a couple hundred dollars to millions of dollars.

So, is there any commercial insurance for this type of exposure?  Like so many exposures, it depends.  Below is a description of how coverage may apply.

First Party Property – Coverage for Owned Property:

  • This risk is excluded under standard property insurance policies. Insurance companies typically consider pest control to be part of ongoing maintenance, and do not view infestation as an insurable peril.
  • Standalone coverage specifically for bed bugs is available to purchase. One item to note is that the coverage is limited to an infestation on a covered premises and it does not extend to employees’ property. Some brief coverage details include reimbursement for the cost of:
    • Bed bug elimination services
    • Treating bed bug-infested apartment/co-op/condo unit contents
    • Cleaning of clothes
    • Additional Living Expenses for a set period of time (24 hrs.)

Third Party Liability – Lawsuits

  • The risk of a tenant/visitor filing a lawsuit based on a bed bug infestation is real. Tenants, guests or visitors may make a claim for reimbursement or make allegations of bodily injury.  Most General Liability polices do not have certain specific exclusions (like the above covered premises exclusion) so coverage (defense and indemnity) should apply as long as negligence or liability is proven.

Workers Compensation

  • If an employee suffers bed bug bites at work, workers compensation will apply. In most cases, the bites are more of a minor annoyance and do not require significant medical attention. However, employees could develop stress-related conditions.

Additional Considerations

  • Disability Claims — As with workers compensation, the primary issue may not be the bites themselves. It could be resulting associated conditions such as stress that could form the basis of a disability claim. The fact that bed bugs are so difficult to get rid of could provide support for such claims, particularly if employees take the infestation home and additional damage occurs as a result.
  • Employment Practices Liability — An employee who is suspected to be the source of an infestation may feel that the suspicion is not based on any objective evidence, but is the product of bias against some protected status, e.g. race, national origin, etc. Similarly, workplace discussions and accusations could lead to harassment claims.
  • Publicity — As a business, you do not want to be in the headlines for this issue. There could be a media/public relations risk which would need to be managed.

Bed bugs, like all risks, require an awareness and education to determine what your exposure is.  The best course of action is prevention but knowing what protection you have available through your insurance program is also important. Good night, sleep tight…