The American Association of Insurance Services (AAIS) is filing a new “virus or bacteria” exclusion designed to exclude losses that arise from organisms that can cause disease.
The exclusion, now being filed countrywide under AAIS commercial lines and farm insurance programs, was developed in light of the possibility of a pandemic of avian flu. However, it addresses contamination from any disease-causing agent, including, but not limited to, SARS, rotavirus, listeria, legionella, and anthrax.
Specifically, the endorsement states that coverage is excluded for loss, cost, or expense caused by, resulting from, or relating to any virus, bacterium, or other microorganism that causes or is capable of causing disease, illness, or physical distress.
In addition, the exclusion explicitly applies to any loss, cost or expense arising from denial of access to property because of any virus, bacterium, or other microorganism.
The virus or bacteria exclusion also states that, with respect to disease-causing agents, it supersedes the terms of any other exclusions, such as those addressing pollutants and contamination, and coverage limitations, including those addressing fungus and related perils.
“Property policies were never intended to a source of recovery for losses arising from organisms that cause disease,” says Alma Gordon-Smith, AAIS director of inland marine and one of the developers of the virus and bacteria exclusion.
“With the possibility of a pandemic, there is concern over potential efforts to create an avenue for loss payment where none was originally intended.”
AAIS is a national advisory organization that develops policy forms and rating information used by more than 600 P/C companies throughout the U.S. The virus or bacteria endorsement is being filed with a proposed effective date of May 1, 2007 in most states under the following AAIS programs: Agricultural Output; Artisans; Businessowners; Commercial Inland Marine; Commercial Output; COP-XL; Commercial Properties; Developers Output; Farmowners; Farm Properties; and Inland Marine Guide.
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