How Policy Silence on Pandemics May Bedevil Insurers on Coronavirus Claims

By | March 26, 2020

  • March 26, 2020 at 11:38 am
    Tiger88 says:
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    As pointed in comments on other articles on this subject: So what? Policies are silent on lots of things that aren’t covered: asteroids, dinosaurs, drought, “global warming” etc.

    • March 26, 2020 at 12:46 pm
      Craig Winston Cornell says:
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      Correct. I have been looking at policies for my clients and while policy language does differ between insurers on what is specifically excluded, most business interruption coverage is triggered only by “physical damage” to the property in question.

      Claiming COVID was “physical damage” to the premises would then require a simple cleaning and disinfecting of the building. And how long would that take? A week? Less?

      • March 26, 2020 at 5:34 pm
        Chris Cheatham says:
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        Craig – I agree with your analysis, generally. We shall see what the legislatures do around this, though.

    • March 26, 2020 at 5:33 pm
      Chris Cheatham says:
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      Good question. Policies that are silent can create a host of issues and liability. Silent Cyber is a great example. NotPetya created a $10B economic loss and $3B insured loss. Much of that loss was triggered by Silent Cyber Policies (or non-affirmative policies).

  • March 26, 2020 at 1:56 pm
    john Wiedemann says:
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    Policy coverage does not change just because of the size of potential losses. Attorneys will always get excited when there is a large base of potential clients. There will be no way that Covid-19 is a covered event on 99% of standard property policies. The only way coverage will be triggered is if the insurance industry and government decide that it would be an efficient way to get relief to clients and government reimburse industry for claims and expenses. I put very little faith in, so called, Insurtech experts.

    • March 26, 2020 at 5:37 pm
      Chris Cheatham says:
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      I agree with your analysis regarding Property policies. Virus exclusions and Damage to Property requirements will generally bar COVID related claims on property policies.

      However, state legislatures and the federal government are making a lot of noise about retroactively creating coverage. We shall see.

      The area where the Silent COVID issue really exists is within casualty policies. We anticipate many claims related to GL, D&O, Workers Comp, and Event Cancelation.

      • March 27, 2020 at 7:32 am
        David Backs says:
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        If the Senate’s bill passes the House and Trump signs, small businesses can get loans for payroll, rent, utilities and other expenses. If the money is used for specific expenses, they don’t have to pay back the loan. The most significant of these is payroll. If that happens, it will significantly reduce the insurance industry’s potential liability as I can’t see allowing businesses to collect twice on those expenses. Another thing often misunderstood by policyholders is Business Income coverage does not replace revenue – it only replaces lost income (aka profit) and other specified expenses like payroll. My understanding of all this may be off and I’d appreciate anyone providing a different point of view.

  • March 26, 2020 at 2:39 pm
    Steven Jackson says:
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    Why does everyone keep giving this guy so much free airtime? All he is doing is getting free publicity.

    • March 26, 2020 at 5:39 pm
      Chris Cheatham says:
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      I think people appreciate that we are making our data available on this important topic. If you are interested, we just made our COVID Coverage checklists available for insurers and brokers that need to analyze policy language.

  • March 26, 2020 at 2:51 pm
    Bill Wilson says:
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    It’s impossible to specifically exclude every loss that could possibly happen and equally impossible to cover them all, especially those that are potentially catastrophic like pandemics.

    That’s why policies have insuring agreements. For most business income policies, there is likely no coverage for damage arising from a temporary impairment of property due to coronavirus “contamination” because coverage is never triggered.

    Check out several of my recent blog posts about this at http://www.InsuranceCommentary.com.

  • March 26, 2020 at 4:10 pm
    knowall says:
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    Eminent Domain the right of a government or its agent to expropriate private property for public use, with payment of compensation.

    Seems like if they pay on this pandemic then they would pay if the business owner or manager is sick or injured and can’t run the business properly.

    • March 26, 2020 at 6:26 pm
      Common Sense says:
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      Check with your Health Insurance provider. Pretty sure they will pay your health claims.

      • March 26, 2020 at 9:10 pm
        knowall says:
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        No, what I mean is they will pay the lost business income if the business owner got sick and was unable to generate income.

        Is that specifically excluded in the policy?

  • March 27, 2020 at 8:57 am
    Vox says:
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    If insurers have to foot the bill for everybody’s business income , then the P&C industry will go insolvent and have to be bailed out by the taxpayers. That’s the short and long of it. Policy language be damned. It’s a purely political matter. That’s it. It is a political question now.
    Other industries are being bailed out. Why not one more? Look at the big picture.



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