For the latest information and resources on Coronavirus, please visit the RCM&D COVID-19 Resource Center at https://info.rcmd.com/covid19.
The coronavirus outbreak (COVID-19) brings about much concern and uncertainty. Of particular concern may be the financial impact and economic consequences that may be imposed on businesses.
We are in the early stages of the coronavirus pandemic. It is a very fluid and ever-changing environment. As a result, it is difficult to know what the full impact of these circumstances may present in time. With potential widespread illness and financial losses, questions are sure to arise concerning the possible role of insurance to mitigate the damages and/or to provide relief for such losses. While insurance policies vary for each line of business, the coverage provided by each policy also differs. There are exclusions in policies that may or may not address issues related to COVID-19. Likewise, insurance carriers’ interpretation of coverage often differs as well. At this time, we do not know what coverage decisions will be made by carriers in response to losses related to COVID-19, so we offer the following information as a general overview of the various insurance coverages and how they traditionally respond. Because states are now proposing legislative changes we cannot anticipate how these changes may impact your specific insurance coverage at this time.
General & Executive Liability
A General Liability policy essentially protects a business against allegations of bodily injury and property damage, as well as other personal or advertising injuries, asserted by a third party, arising out of an insured’s business operations. The procedures that businesses implement to warn and protect against exposure to the coronavirus could create a potential liability exposure for them. Claimants could argue that the insured was negligent in their failure to warn or protect them against the risk of exposure to the outbreak. Insurance companies will no doubt try to limit or eliminate their exposure by pulling down on policy exclusions for exposure to fungi, bacteria, or pollutants, however, favorable arguments could possibly be used to overcome these denials. Again, all of this is so new that we don’t know how any of this will play out in the court system.
Additionally, there may be some creative claims brought against Directors & Officers policies by third parties. These shareholder claims may allege that inappropriate, inadequate or even, no action was taken as relates to the coronavirus. Examples that may lead to a potential suit may include failing to disclose financial risk or secure supply-chain alternatives to ultimately protect the business during the pandemic. Many private company policies are broader in nature and may provide Regulatory coverage, but they are also more likely to contain an Antitrust exclusion for any claim alleging price-fixing or other anti-competitive behavior (i.e. price gouging). D&O policies are usually claims made policies and require that you report a potential claim/incident or circumstance immediately to your insurance carrier. Some exclusions to look out for in these policies include those that relate to bodily injury, fraud, dishonesty and willful violations of the law.
Similar to Directors and Officers coverage, Employment Practices Liability policies exclude Bodily Injury/Property Damage. There could be situations where employees claim unsuitable working conditions, or where employees seek accommodations due to working from home or while under quarantine.
- Download Executive Risk Solutions: In the current environment of heightened D&O claim levels, caused in part by the fairly recent development known as “event driven” litigation, we would not be surprised to see D&O litigation relating to the COVID-19 outbreak
We are in unchartered territory in the United States and internationally. If you believe that you may have a claim, or circumstance that could lead to a claim, we continue to recommend that you report all claims or potential claims to their appropriate carriers per the instructions provided in your Claim Reporting Manuals. While there may be exclusions in your insurance policies that could apply, as circumstances continue to change, we are starting to see States proposing new legislation surrounding various exclusions.
Be assured that RCM&D strives to advocate on behalf of every client. When coverage is denied or disputed, our team will assist in evaluating the carrier’s position against the policy language. Every effort is made in assisting our clients with negative coverage determinations. We will continue in that regard as well to COVID-19 related claims. Any valid and appropriate argument will be considered to advocate on behalf of our clients when coverage is disputed.
RCM&D is making every effort to anticipate our clients’ questions and concerns during these ever rapidly changing times. If there are any questions, or if further assistance is needed with the claim process, please let us know.