Business insurance policies contain exclusions precluding coverage under specified circumstances. Two exclusions potentially relevant to COVID-19 claims are the virus, bacteria or communicable disease and pollution exclusions. In this blog post, we examine these exclusions in the context of coverage issues for COVID-19. Top 10 life insurance companies.
COVID-19 has sickened hundreds of thousands of people and resulted in the deaths of thousands. Millions will likely be affected. Up until very recently, there was widespread belief that some countries may be spared the level of disruption seen earlier this year. Recent events have shown this is no longer a reasonable assumption. The WHO has declared COVID-19 a global pandemic, the United States designated a national emergency, and financial markets recently suffered their worst weeks since 2008, resulting in the stock market ending its lengthy and historic bull market run.
These events have brought great uncertainty, and businesses are scrambling to procure options to stay afloat and mitigate the damages. One option is pursuing coverage under commercial insurance policies. Businesses may find that this pursuit will not achieve the desired goals unless they have purchased broad coverage for pandemic-type events.
Insurance policies differ markedly and coverage grants and exclusions are not all the same. As is usually the case, the specific terms and conditions of an insurance policy will prevail over assumptions and generalizations. Thus, any analysis of whether insurance covers claims arising from COVID-19 will be a fact-based determination on an individual insurance policy basis.
In a series of blog posts, we will examine several of these coverage questions.
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The first insurance coverage case has been brought by a restaurant in New Orleans seeking a declaratory judgment against its insurer, as well as the governor and the state, that the restaurant’s insurance policy does not contain an exclusion for viral pandemic and that the policy will cover the restaurant for any future civil authority shutdowns due to physical loss from COVID-19 contamination, and that the policy provides business income coverage in the event COVID-19 contaminates the restaurant. The complaint was posted on Insurance Law 360 (subscription required).
Among the various consumer data privacy laws are laws precluding companies from collecting and selling consumer credit card information. When a company is accused of selling its customers’ credit card information to third-parties in a class action, does it have insurance coverage to defend it from that class action? The Ninth Circuit recently addressed this question.
There are two main questions in every insurance coverage dispute. First, what are the actual facts that gave rise to the claim? Second, what are the actual words contained in the specific insurance policy provisions relevant to the claim? The facts and words matter because, more often than not, each claim and each policy has differences. And the differences will matter when construing insurance policies in the context of COVID-19 claims.
Insureds often face lawsuits where the claimant is seeking a broad array damages some of which may be covered by insurance and some of which are not covered by insurance. Because the duty to defend is very broad, insurance companies will typically defend under a reservation of rights concerning the allocation between covered and non-covered damages. In a recent case, the Eleventh Circuit examined the duties between the policyholder and the insurance company concerning liability for an unallocated jury verdict.
During an earlier insurance availability crisis, the federal government enacted the Liability Risk Retention Act (“LRRA”). Under the LRRA, a risk retention group (“RRG”) can be formed in one state and can do an insurance business in other states. As discussed in a recent blog post, some states have passed anti-arbitration laws that preclude insurance policies in those states from containing arbitration provisions. What happens when an out-of-state RRG demands arbitration of a coverage dispute against an insured in a state with anti-arbitration laws?
As data privacy statutes proliferate, insurance coverage disputes are rising concerning whether liability policies cover the defense and indemnification of violations of data privacy statutes. Many of these consumer data privacy statutes predate the mass electronic collection and storage of personally identifiable information. The analysis is similar about whether there is coverage against lawsuits arising out of older consumer privacy statutes or newer data privacy statutes. In a recent case, the coverage dispute arose over a lawsuit brought under the Driver’s Privacy Protection Act of 1994 (“DPPA”).
Most reinsurance contracts have binding arbitration provisions. The Federal Arbitration Act (FAA) sets out a national policy in favor of arbitration. Yet, there are states that expressly preclude arbitration provisions in insurance contracts. Does that apply to reinsurance contracts?
What happens when, after a reinsurance arbitration over how the ceding company billed the reinsurer is resolved in the reinsurer’s favor with a final award confirmed by the court, the ceding company rebills the reinsurer for the same losses (but differently than the way it did during the prior arbitration)? If the reinsurer again denies the billing, is the dispute subject to arbitration or is it precluded by the court’s judgment confirming the prior arbitration award? That is the issue addressed by a Massachusetts federal court.