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Featuring:
Jim Hamilton, CRC Denver
Trey Willams, CRC Norcross

Property

COVID-19 is likely to impact businesses both directly and indirectly, inspiring policyholders to evaluate both first-party and third-party coverages for relief from losses. With any claim, policy language, specific triggers, and loss drivers must be evaluated to determine if coverage applies. It’s expected that most property policies may not be triggered by COVID-19 losses because shutdowns caused by pandemics generally do not meet the physical damage trigger requirement inherent in standard property policies, and pandemics are often specifically excluded (source). However, there may be a property coverage extension available from some markets that includes coverage for business income losses resulting from the enforcement of a law or ordinance by an authorized governmental agency intended to mitigate the spread of communicable disease. The coverage effectively adds a communicable disease trigger to the Civil Authority coverage extension. The coverage is generally reserved for clients meeting a certain premium threshold on their all-risk policy and is typically provided with a sub-limit not to exceed $250,000. Most large company carriers’ underwriting authority caps out around $2.5 - $5M for larger entities such as hospitals or casinos. Due to increasing concerns around COVID-19, most carriers are performing internal audits to quantify their exposure to the virus whether extended through the Interruption by Communicable Disease Extensions or embedded within manuscript forms. Not only are carriers re- examining communicable disease coverages, but they are also taking a close look at other property coverage extensions that do not require a physical damage trigger. It is not unreasonable to expect a reduction in underwriting authority for these coverages, which will lend itself to additional exclusions or nominal sub-limits intended to act as a defensive cover.

Environmental

Outside of the property arena, some may begin looking to environmental insurance policies to address coronavirus related losses. So far, the environmental marketplace has been divergent in their response to COVID-19. Over the last 7-14 days, a few carriers have established that all new environmental quotes issued will contain a virus or coronavirus- specific exclusion or some form of communicable disease exclusion. On the other hand, some of CRC’s environmental carriers have taken the opposite approach and are viewing this outbreak as an opportunity to provide affirmation of varying degrees of coverage for virus/bacteria by including it in the policy’s definition of microbial matter, pollutant, or pollution condition. Some policies may cover bodily injury, property damage and clean-up costs while others may only offer coverage on a sub-limited basis for clean-up costs or disinfection expense. In either case, the bodily injury and property damage coverages are 3rd party claim tr

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