As businesses nationwide begin a phased reopening, lawsuits in which individuals who claim to have suffered bodily injuries from exposure to the virus are expected to increase. As they happen, the insurance industry will begin to see more businesses seeking coverage under their commercial general liability (CGL) policies for these third-party claims.
According to an article by Willis Towers Watson (WTW), whether coronavirus claims will be covered will vary based on individual circumstances and a number of factors, including how a policy is written, exclusions and even the jurisdiction.
In the GL insuring agreement, the contract is written as a promise to pay for harm caused by an occurrence, which is typically defined as an accident and includes continuous or repeated exposure to the same general harmful conditions. In most CGL policies, bodily injury is defined as a sickness or disease sustained by a person – so it would appear that an individual who alleges being exposed to the virus, and who suffered bodily injury due to being exposed at the insured’s place of business, would trigger coverage.
However, to be considered an occurrence under a CGL contract will likely be based on whether there is enough evidence to support that the alleged failure to prevent the exposure was something the business didn’t foresee. Given that statewide restrictions, federal mandates and CDC warnings over the past year have continued to broadcast and reinforce the need to contain the virus, a claimant who alleges becoming infected could be regarded as a foreseeable event – one that was expected by the business. As a result, coverage for the insured entity under its CGL policy would not apply.
Another issue that has insurers responding to and impacting CGL policy coverage and third-party claims involves policy exclusions. Even in the event where coverage for contracting the virus is considered an occurrence under the businessowner’s CGL policy, certain exclusions could result in a denial of coverage. While policies will differ among carriers, there are some CGL policies that specifically exclude coverage for communicable and infectious diseases. Depending on how the policy is worded, the exclusion may bar coverage for claims related to COVID-19.
Then there are pollution exclusions. Currently, some industry experts speculate that the industry will begin to preclude COVID-19-related claims under a CGL policy’s pollution exclusion. According to the WTW article, it is expected that the industry will begin to see policyholders take the position that COVID-19 is not a pollutant because it occurs in nature and not as a consequence of traditional environmental pollution.
The level of coverage under a CGL policy will often vary depending on the jurisdiction’s law and how it is interpreted. According to WTW, policies containing a choice-of-law provision will typically be the governing law. For policies lacking the provision, courts are allowed to apply other factors to determine the choice of law, such as reverting to the law where the policy was issued, the place where the insurer’s underwriting department is located, the location of the insured risk during the term of the policy, or other states where there may be a more significant relationship regarding the particular issue.
As we continue to fight COVID-19 and move into recovery mode, it is expected that more claimants will begin to file lawsuits against businesses and seek compensation for their exposure to the COVID-19 virus. It is also anticipated that the burden of proof will likely fall heavily on the claimant to prove liability on the business where they were allegedly infected. As your business clients navigate through the pandemic recovery period, it’s important for you to review and discuss with insureds their CGL policy language, exclusions and applicable jurisdiction laws to determine their coverage against COVID-19-related claims.
We offer a wide variety of commercial liability insurance markets and are well suited to insure virtually any class of nonstandard business. Optional umbrella and excess liability packages are also available. To learn more, please contact Samantha Fritch at 213-236-4604 or firstname.lastname@example.org.