To our Guy Hurley Clients:
As the situation with COVID-19 continues to evolve, more questions are arising on potential insurance coverage responses. Unfortunately, there are no clear-cut answers, as each potential claim would be addressed by the individual carrier on its own merits and policy specifics. But we offer the following for your review:
Most insurance policies contain exclusions that will preclude coverage for loss or damage caused by or resulting from virus, communicable disease, bacteria, contamination and/or pollution.
Getting beyond the coverage exclusions, most policies contain a coverage trigger that requires direct physical loss of or damage to property to occur at the insured’s premises or a dependent property, if coverage is to be afforded, or in order for business interruption or contingent business interruption claims to be considered. In the absence of any direct physical loss or damage to covered property, there is little potential for coverage.
Any potential coverage for “Action by a Civil Authority” would be subject to the same requirement for direct physical loss or damage for coverage to apply.
Some policies could include sub-limits or coverage enhancements in extension forms and/or carrier proprietary endorsements for certain operations (hospitality, entertainment, medical) – each policy would need to be reviewed to verify potential coverage.
“Soft costs” (contract delay penalties/increased costs) as they relate to builder’s risk/installation floater policies are subject to the same “direct physical loss or damage from an insured peril” requirement in order to trigger coverage.
Workers’ Comp policies may respond to claims from employees who have been exposed to the virus during the course and scope of their employment. Every state has different statues in this regard. Michigan also has the requirement that the contraction of the virus arose out of the employment. Each claim needs to be assessed individually.
Please see the attachment for thumbnail descriptions of potential claims and responses by line of coverage.
In this rapidly changing situation, insurance coverage for potential claims related to coronavirus will depend on the unique set of facts surrounding each claim. Carriers are always reluctant to address hypothetical scenarios, and this situation is no different. Anyone believing they may have suffered an insured loss should report it to the carrier to allow investigation into the particular facts in order to make a coverage determination.
Having digested the above, please don’t hesitate to reach out to your Guy Hurley account executive with any coronavirus-related questions you may have. We are certainly in unique and uncharted territory. But we also consider this an opportunity to work together, not only as fellow employees, but with our valued clients and underwriters. We are certain that you do too.
Richard McGregor, CPCU