What types of commercial insurance apply to COVID-19 losses? This article explains what types of policies should be collected and reviewed for potential coverage.
Here is a representative list of policies that should be collected and reviewed for possible coverage for COVID-19:
- Commercial property insurance policies (business interruption coverage, and civil authority coverage, among others)
- Event Cancellation insurance
- Commercial General Liability insurance
- Workers Compensation insurance
- Directors and Officers insurance
- Employment Practices Liability Insurance
- Pollution Liability Insurance
- Trade Credit insurance
Key policy provisions to review include the notice requirements (especially for claims-made policies) and the business interruption and civil authority coverages in property policies. Further, policies should be checked to see whether they contain exclusions for loss related to virus, bacteria, biological materials, or infectious disease. For companies approaching renewals, beware that underwriters will seek to impose a broad virus exclusion to preclude coverage for COVID-19 and similar diseases.
In reviewing the early COVID-19 coverage lawsuits filed by policyholders against their property insurers, a core issue is proof of COVID-19 at or on the property. Another seminal issue is whether the presence of COVID-19 constitutes property damage or direct physical loss such that the insurer is required to reimburse the company for business interruption losses (i.e., closure of business locations/halting of business operations to stop the virus from spreading). Accordingly, claim notices should reference the issuance of governmental orders closing non-essential businesses and any public advisories regarding surface contamination. Some of the lawsuits specifically allege that “the deadly virus physically infects and stays on surfaces of objects, materials, “fomites,” for up to twenty-eight days” and they have pointed to the actions of other countries (China, Italy, France and Spain) that cleaning and fumigating public areas for the virus is required prior to reopening.
Coverage for COVID-19 is an evolving issue with daily reports of companies suing their insurance carriers for COVID-19 losses and insurance carriers taking a firm stand that coverage does not exist. Companies should be proactive and carefully review their insurance policies as there may be policy language that provides a path for making an argument for coverage for COVID-19 losses with their insurance carriers.