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Commercial General Liability Insurance Policies and Their Application to COVID-19 Bodily Injury Claims

November 17, 2021
March 27, 2020

According to the Center for Disease Control, as of March 27, 2020 there were 85,356 COVID-19 cases reported in the U.S., with 1,246 related deaths. These numbers are expected to grow significantly over the coming weeks. This pandemic has forced many small businesses to shut down, leading to historic numbers of layoffs. Others have had to reduce their workforce, with no promise to those laid off that they will have a job to return to.

To add insult to injury, a wave of litigation involving COVID-19 is undoubtedly expected. In the context of third-party bodily injury claims, businesses and institutions such as schools, medical facilities, airlines, hotels, restaurants, grocery stores and cruise lines face the highest exposure. Just this month, a South Florida couple sued Princess Cruise Lines.  The couple is claiming the company failed to take reasonable precautions to prevent a coronavirus outbreak on one of its ships after two passengers on the previous voyage disembarked with symptoms. This is surely only the beginning.  

The question that all commercial general liability insurers must answer is: are those claims covered? The simple answer is: It depends. A typical commercial general liability policy provides that the insurer will “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury,’” but only if  “the bodily injury is caused by an ‘occurrence.’” An “occurrence” is generally defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” To constitute an occurrence, the injury has to be unexpected from the insured’s standpoint.  Insurers will have to argue that insureds knowingly disregarded the risk of COVID-19 with the expectation that the injured party would contract the disease, thereby invoking the “expected or intended injury” exclusion which negates coverage for bodily injury that is expected or intended from the standpoint of the insured. Given that information concerning the virus is still being developed, it will be a tough burden for an insurer to overcome.  

Furthermore, whether the bodily injury is caused by an occurrence would largely depend on the nature of the allegations of the complaint. We can expect the complaint to be crafted to invoke insurance coverage by alleging negligent conduct rather than reckless or even intentional conduct.  In sum, we can expect that, in a vast majority of cases, there will be coverage for COVID-19 liability unless the policy has a specific exclusion for communicable disease.

Even with coverage afforded for COVID-19 bodily injury claims, it will be difficult in many instances to prove that the exposure was the proximate cause of the claimant’s contraction of the illness. This is especially true in situations where the person was exposed in a number of different places in a short period of time. What insurers will find is that the facts needed to make a proximate cause assessment will likely be unavailable until litigation is well underway. This of course does not excuse an insurer from its duty to defend at the outset. Generally, for the duty to defend to be triggered, the lawsuit only needs to assert claims that if true are covered under the CGL policy.

We can expect some insurers to disclaim coverage based on other standard exclusions for claims of bodily injury resulting from exposure to a "pollutant" which is further defined, in part, as a contaminant. Is COVID-19 a contaminant? The answer to this question lies in the hands of the courts and whether they interpret this term broadly enough to encompass COVID-19.

Insureds may also seek coverage under "Coverage B" of their commercial general liability policies, which includes coverage for personal injury caused by false detention and imprisonment. If a person alleges they were improperly detained and quarantined (for example, on a cruise ship), then this coverage could be triggered.

In sum, there is little doubt that the continued spread of COVID-19 will lead to a growing number of third-party bodily injury claims, each with their own unique set of facts and coverage questions. Chartwell Law’s insurance coverage attorneys remain committed to assisting their clients in these uncertain times. Should you require assistance determining whether a submitted claim anywhere in the United States is covered, please do not hesitate to contact us.

This article should not be construed as legal advice. The contents are intended for general informational purposes only.