We have had clients from a range of industries asking us in the past two weeks about the novel Coronavirus (COVID – 19). The questions we have been asked are typically some variation of, “are we covered?” There is no universal answer for this. The least complicated way to look at things is to understand the cause of loss.
A lot of news and resources have been floated around the internet over the past two weeks about the Coronavirus. Most of the advice we have been giving to others is about “managing the risk” rather than having an insurance policy respond to a claim that is made. For instance, we have a partnership with a consulting and advisory firm offering to provide assessments and contingency plans in the event of a loss, and another firm that has created a customizable app to remind employees of best practices to prevent the spread of a virus.
For additional information about preventing the spread of Coronavirus, as well as workplace compliance issues related to the situation, download our latest Compliance Bulletin at the link below:
Here's a deeper dive into some various lines of coverage:
Business Income / Interruption: Claims of this nature are probably not covered but it is where I think we will see some attempts for coverage to be triggered. This coverage pays for loss of net income and continuing operating expenses due to a covered cause of loss. In the case of the Coronavirus, it appears difficult for an Insured to identify where the covered cause of loss is. Some companies that have contingent business interruption coverage may try to make claims against an indirect loss if suppliers or customers are affected by the Coronavirus.
General Liability: The intent of insurance companies is not to cover a loss resulting from the Coronavirus but ensuing litigation may change things. General Liability is meant to largely cover claims alleging bodily injury and property damage to others where the Insured is held legally liable. Some insurers have exclusions for virus, or pandemic. All General Liability policies have exclusions for “Expected or Intended Injury.” In my opinion, an Insured would need to be held legally liable or show some negligence if coverage were to be triggered resulting from a claim alleging that someone contracted or expired from the Coronavirus. We are suggesting that our clients adopt CDC guidelines for preventing the spread of the virus in order to obviously prevent the spread but also to create defensibility in the case of a lawsuit. There are other reasons why it would be difficult for a plaintiff to successfully win a claim for negligence. Proving that the Insured was in fact negligent or proving that the Coronavirus was contracted at the Insured’s place of business would likely be difficult.
Workers Compensation and Employers Liability: The general consensus here has been that Workers’ Compensation policies probably won’t respond to a claim resulting from Coronavirus but I think that will be challenged. These policies typically cover injuries sustained in the workplace and injuries from an occupational related illness. Proving someone contracted the virus in the workplace may be difficult. A connection to a contracted disease would need to be established to the Insured. One example of this may be in a healthcare environment. If the contracted illness was alleged to be due to the treatment of those already with the illness, a direct link could be established. If it is determined that the Coronavirus was contracted at work, it is a likely assumption that Workers’ Compensation may respond to the loss.
Environmental/Pollution: If an Insured had this policy, there may be an opportunity for coverage if a third party contracted the disease and it was proven it came from your workplace. Again, it may be difficult to prove similar to the examples noted under the General Liability insurance.
Directors & Officers: For privately owned and nonprofit companies, the D&O policy would likely not respond to the actual bodily injury. The policy may respond to litigation for failure to plan or manage the exposure.
Event Cancellation Insurance: This is typically where most questions in the last two weeks have come from. Neither the expected revenue from an event or the expenses incurred prior to the event are directly covered under most insurance policies. At this point, trying to buy Event Cancellation policies with communicable disease coverage is not possible if an Insured expects the Coronavirus to be covered (i.e. trying to insure a smoldering house scenario). From our experience and conversations in the past two weeks, we have seen all new “Event Cancellation” quotes contain a Coronavirus exclusion. We learned this as recently as Wednesday from our counterparts in London. However, some existing policies include small coverage grants for a Business Conference Cancellation. There are policies written for nonprofit human service companies that may contain a coverage grant for the expenses previously paid by the Insured for attendance at a business conference if the conference is cancelled due to contagious diseases. The limits are not very high. We have seen limits around $25,000. There are other subjectivities to review but they will vary from one insurer to the next.
If you have a question or scenario that you think might lead to a loss, please feel free to contact me to discuss and explore where coverage may exist.
Rafael C. Haciski, Esq.
Vice President, Healthcare