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Insurance Coverage, Liability and Exclusion During COVID-19

The COVID-19 crisis has affected virtually every aspect of business throughout the world, and the insurance industry is no exception. Quarantines, government ordered shutdowns and restrictions, sick employees and sick customers are just a few of the occurrences that will lead business owners, sooner or later, to ask “Do I have coverage for that?” As is true virtually every other time that question is asked, the answer is, “It depends.”

There are two primary factors that control the answer: (1) the specific facts of your particular situation and (2) the specific language of your policy. This renders the making of predictions particularly difficult, for not only are the potential factual scenarios virtually infinite, many – but not all – insurers reacted to previous flu pandemic threats in the early 2000s by including language in their policies purporting to exclude infectious diseases from some – but not all – coverages.

For example, a liability claim based upon allowing a customer or patron to be exposed to the virus may be covered by your commercial general liability policy, but some policies may have language that eliminates coverage if an “insured” transfers a “communicable disease” to another person. With regard to workers compensation, an employee with COVID-19 will likely not be entitled to benefits unless he or she can prove a direct relationship between his or her employment and contracting the illness, which may be very difficult to do. As for business interruption claims, many (but again not all) policies will exclude coverage if the triggering event was caused by a “virus.” However, the applicability of this exclusion is not so clear if, for example, the triggering event is a government shutdown ordered to prevent the spread of a virus.

Whether general liability or business interruption, we know you have questions, and we’re here to help. Contact one of our insurance attorneys today. We also post updates on important developments here:  www.gentrylocke.com/coronavirus.

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