Coronavirus – Policy coverage concerns

Given its rapid spread, the World Health Organisation has declared novel coronavirus (2019-nCoV) to be a public health emergency of international concern.

The outbreak has spread from China to at least 40 countries around the world, affecting markets and disrupting travel, the toll of the outbreak starts to become apparent.

With respect to insurance, pandemic and other outbreaks raise significant issues with coverage under various forms.

With respect to insurance, clients are advised to review their requisite cover particularly their Property Damage/Business Interruption (PD/BI), Public Liability/CGL (CGL) and Workers Compensation (WC) policies.

Property Damage/Business Interruption (PD/BI)

Many property policies will contain an “infectious disease extension” clause (the “ID Extension”) that will specifically write coverage for outbreaks emanating from the “Insured Premises” into the policy.

Typically, in Australia, for coverage to be triggered in policies, it requires that the infection, disease or virus for which the closure occurs is actually “present” at the location or upon the premises insured. Obviously, in such circumstances clients must be certain of their policy requirements and that they have adequate documentation from authorities.

Commercial General Liability (CGL)

Generally, CGL policies may respond to pandemic events if the insured has been negligent in, or found legally liable for, failing to protect other persons/third parties from infection.

The term ‘legally liable’ is very broad and can arise at common law or under statute or a contract with a third party. Most common law liabilities involve a negligent act or omission, that would need to be proved.

A CGL policy does not routinely include an infectious disease exclusion, however, the policy should be reviewed to ensure any deviation from this norm, particularly the more bespoke and manuscript wordings. 

Workers’ Compensation (WC)

WC coverage is another avenue where coverage could be afforded for losses arising as a result of the virus. 

The exposure would have to take place in an employment setting (as per local regulation definitions) and in the case of an employee contracting the virus elsewhere they may not be afforded cover under the policy. Again, documentation of any infectious event, or exposure at work, would be necessary to ensure that the employee receives medical care and compensation through your WC policy.

This is a time where “forewarned is forearmed” and with the differences in policy wordings, and cover, a detailed study of your policy’s wording is imperative.

If you require assistance from a business interruption perspective, or a liability perspective, or even a workers’ compensation perspective, please contact your Marsh representative.