General Liability & COVID-19

General Liability Insurance (aka GL or CGL) is often referred to as “third party” coverage.  A contract between you and your insurer to protect against certain claims brought by a person or entity outside of that relationship.  Your GL policy protects the insured from the risk that others bring suit or file certain claims against you seeking damages for which they allege you are legally liable.

The terms of the GL insuring document promise to pay for harm caused by an “occurrence”.  An occurrence is often defined as an accident, including the continuous or repeated exposure to substantially the same general harmful conditions.  Whether harm from the alleged failure to prevent exposure to COVID-19 is caused by an accident may depend on whether the insured party foresaw the claimant’s injury.

One would not expect claim facts to demonstrate or support that a Community Association Board or Board member chose to intentionally cause foreseeable harm to a third party.  Rather, under normal circumstances, the key issue would likely be whether there was an element of chance supporting the position that there was, in fact an accident.

We anticipate that some insurers will likely argue, that given the multiple warnings and recommended actions to prevent exposure to COVID-10, that there is no “occurrence”.  But before the carrier is placed in a position or duty to defend, the true question will arise, “is there exclusionary language in the policy that will potentially limit or exclude defense?”

After the SARS outbreak last decade, most insurers added exclusions to the GL for Communicable Diseases and Organic Pathogens/Fungi/Mold/Mildew/Yeast/Microbe.  In addition, the “expected or intended” exclusion in the policy may also prevail unless it can be determined that the Board acted egregiously in the reopening or basic implementation of the “Stay at Home” governmental actions.

General Liability claims are likely to follow this pandemic and claims will be filed.  The best advice from an insurance perspective is to seek and follow the advice of your legal professionals.  This will help reduce the potential for “egregious” behavior and actions on the part of Board members that could lead to an insured or uninsured event. 

-Clay Collins, CIC, CRM 

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