Page 40 - Delaware Medical Journal - May/June 2020
P. 40
CORONAVIRUS DISEASE
(COVID-19) FAQ:
How Are Coverage Areas Affected?
Sharon Ruth
Givenpreviouscases,whetherthe presence of the virus (and requirement) on the surfaces of equipment, walls, in HVAC units, etc., constitutes “property damage.” Forthosepoliciesthatdonothave
the inability to occupy or utilize an insured building, due to the virus, constitutes property damage.
disease” endorsements/extensions, providing limited and targeted coverage, will respond.
triggers driving losses will determine the applicability of coverage. We at MSDIS advocate for our clients, for the most favorable response available under applicable policies. That said, this is a unique situation litigation will likely challenge many policy defenses presented by insurers.
BUSINESS INTERRUPTION
When evaluating Business Interruption
business income losses are driven by the existence of the virus at an insured location or by indirect exposures where we would look to traditional coverage extensions (i.e., civil authority, ingress/egress, supply chain, or other contingent-time-element type of coverage).
Coverage is normally triggered as a result
of direct physical loss/damage insured
herein and occurring during the term of
the policy to real and/or personal property insured herein. That is the starting point when evaluating coverage. Has the insured sustained direct physical loss/damage insured herein at an insured location? Similar to the triggers need to be met for the BI coverage
to apply.
The vast majority of claims will be tied to BI losses from indirect exposures. The
The coronavirus will impact businesses on both a direct and indirect basis. Whether affected directly or as a result of supply-chain disruptions throughout the world, businesses coverages for relief against losses.
Simply pointing to the coronavirus as the proximate source of losses will start the discussion, but a thorough review of the facts will be needed to evaluate coverage. drivers and to be able to demonstrate and support a causal relationship between
those triggers and sustained losses.
PROPERTY LOSS
We anticipate that most property policies will not respond to this event in any meaningful way. However, we expect coverage to be tested given the emerging nature of the risk, such as:
Whetherthepresenceofhuman-to- human contagious disease/virus reaches the threshold of “direct physical damage of the type insured against” or simply “property damage.”
136
Del Med J | May/June 2020 | Vol. 92 | No. 3
