Robert M. Travisano, Member of the Firm in the Litigation & Business Disputes practice, in the firm’s Newark office, was quoted in Brushware Magazine, in “Insurance Upset: Covid-19 Forces a New Look at Policies,” by Phillip M. Perry.
Following is an excerpt:
Businesses face many questions about insurance coverage for the costly damages incurred by the COVID-19 pandemic. What unexpected exclusions are only now becoming apparent? What litigation should be expected? And how can businesses retool their policies to reflect the increased risks in the months and years ahead? The risk of legal action is very real. …
In this article, attorneys and insurance consultants address the most important concerns in the areas of Commercial General Liability (CGL), workers compensation and Employment Practices Liability Insurance (EPLI). A sidebar covers business interruption insurance.
CGL Insurance …
Suppose someone is sued and loses: Will damages be covered by one’s CGL policy? Such insurance is intended to cover bodily injury and property damage caused to third parties on an insured’s premises. “Provided the particular policy does not exclude coverage for virus exposure, it is conceivable that a CGL policy could provide bodily injury coverage for liability arising from the infection of a customer or vendor,” says Robert M. Travisano, an attorney in the litigation practice of Epstein Becker Green.
That “conceivable” word raises alarm bells. For more than one reason, uncertainty surrounds this topic. One problem is that in many policies, coverage for a virus is either carved out or requires a specific endorsement. Another problem is that legal liability is required to trigger coverage. The infection must have arisen from some breach of care on the part of the insured business. And what constitutes such negligent conduct is still unsettled. …
As the above remarks suggest, much of the law is currently unsettled. “Given the unique predicament we now find ourselves in, there isn’t a whole lot of law surrounding the nature of the duty of care to a customer or vendor for coronavirus exposure,” Travisano says. “We can expect that CDC guidelines will fill in the blanks for such duties until the law becomes more defined as lawsuits work their way through the pipeline.” …
Business Interruption Insurance
Will business interruption insurance reimburse profits lost from the COVID-19 pandemic? Maybe not. …
The pandemic has put a spotlight on the exclusions buried in commercial insurance policies. …
Some policies might not address the pandemic topic at all. …
A second problem is the unseen nature of the damage incurred. “In the context of COVID-19, many insurers are taking the position that they do not cover virus-related closures because there has been no ostensible damage to property,” says Robert M. Travisano ... “This very point is the subject of several pending lawsuits and is sure to be hotly debated over the next several months and years as the true economic impact of the pandemic unfolds.”
So what will the courts decide? …
When checking one’s own policy for coverage, peruse the fine print. The terms of each insurance policy differ, and a maze of exclusions and endorsements must be navigated to determine coverage.
Some insureds may wish to increase coverage. “Businesses can purchase insurance that responds specifically to a viral outbreak,” Travisano says. “Such coverage largely came on the scene following the SARS outbreak in 2002-2004. However, given COVID-19’s prevalence and virulence, it is now likely that insurers will attempt to limit their risk by offering virus and disease coverage that is markedly more expensive or excludes COVID-19 outright.”
Related reading:
August 2020, Texas Propane, “COVID-19 Liabilities & Insurance: What You Need to Know,” by Phillip M. Perry.
