Though much of the conversation regarding insurance coverage for COVID-19-related losses has focused on the potential for business interruption-type coverage (see prior discussion here), insureds should not overlook the potential that COVID risks trigger other types of coverage. For example, as previously discussed here, some insureds may seek coverage under D&O policies should they face securities and derivative-type claims.

In addition to the forms of coverage we’ve previously blogged about, businesses who have continued operations during the pandemic as well as those considering whether, when, and how to reopen their businesses in the coming weeks and months should consider whether they will be able to access coverage under their GL policies for some COVID-related claims. For example, companies that continue or restart operations in some form during the pandemic may anticipate claims from individuals who allegedly contracted the virus while interacting with that company’s employees or independent contractors. While those claims will likely face significant causation issues (will plaintiffs be able to substantiate transmission from a particular source though some combination of location tracking data and genetic testing of the virus?), these kinds of claims can be costly to defend and may create significant risks for certain businesses.

The good news is that claims by infected individuals may be covered under standard GL policies that insure against “bodily injury” arising from an “occurrence” – an individual who becomes ill as a result of exposure to the virus suffers “bodily injury,” and the nature of virus’ spread makes it likely that from the standpoint of the insured any transmission was the result of an accident. (There may also be an argument that there has been “property damage” where viral particles contaminate a property and prevent a company from continuing to use the space.)

Insurers may resist accepting coverage, but many of the issues they might raise can be overcome.

No Occurrence Arguments: CGL policies’ insuring agreements commonly require an “occurrence”, which is usually defined as being “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Insurers may argue that there has been no accident and that as a result there is no coverage, even if there is alleged bodily injury (or property damage). Insurers may be more inclined to raise this argument where (1) viral spread has increased significantly such that a substantial portion of the relevant population is suspected to be a carrier and/or (2) the claimant asserts that the virus was transmitted by an employee/independent contractor who showed visible symptoms (or who is known to have contracted coronavirus). Courts have addressed similar “no occurrence” arguments in a number of contexts and reached varying results. See, e.g., Campanella v. Northern Properties Group, LLC, 2020 WL 979888 (D. Minn., Feb. 28, 2020) (rejecting insurer’s argument that there was no “occurrence” where a property owner allowed a toxic build-up of chicken feces at its building, noting that “[the insurer] cannot point to any facts suggesting that any party foresaw [the reporter] contracting [a disease transmitted through spores in chicken feces.]”). In short, the more likely transmission by a particular individual becomes, the greater the risk that an insurer will argue that there was no identifiable “accident” that would trigger coverage.

These kinds of “no occurrence” arguments tend to overlook the likelihood that plaintiffs will include negligence-type claims – either for negligent supervision, or negligent failure to train on proper safety procedures, or negligence in failing to provide appropriate protective materials like masks and hand sanitizer – in those suits. Where plaintiffs include such claims (or include allegations sufficient to support such claims), insureds will likely be able to argue that cases like Liberty Surplus Ins. Co. v. Ledesma & Meyer Const. Co., 5 Cal.5th 216 (2018) require the insurers to at least provide a defense. Ledesma stands for the proposition that tort theories like negligent supervision or negligent hiring can constitute an “occurrence” within the meaning of GL policies, at least under California law. (State-specific legal issues as well as state- or locality-specific infection information will play an important role in the coverage analysis in these kinds of cases.)

Other Exclusions: Insurers may also argue that various types of exclusions bar coverage. Some of the most commonly-cited will likely be:

• Mold/Fungus/Bacteria Exclusion. While some versions of this exclusion do reference “infectious agents” or “communicable diseases,” many do not. Insureds should be mindful that a virus is not a bacterium. Viruses are also not “alive.” Whether this exclusion applies will depend on the particular language in the insured’s policy.
• Auto Exclusions. Particularly with respect to delivery services, insurers may cite various forms of the auto exclusion to argue that the bodily injury arises out of the use (or entrustment to others) of a vehicle owned by an insured. Whether transmission of a disease “arises out of” the use of a car or delivery truck is debatable, but it is worth noting that some versions of this exclusion are written to bar even negligent-supervision-type claims.
• Violation of Law Exclusions. Some policies will include exclusions barring coverage for injury caused by or arising from an act that violates any statute, ordinance or regulation of any federal, state or local government. While the language of these exclusions is often restricted to violations of certain kinds of laws (e.g., antitrust laws, or consumer protection laws, or laws related to the publication of information), some are written broadly. It is possible that insurers will cite these exclusions where shelter-in-place orders are in place while arguing that the activity at issue was “non-essential” and thus in violation of the order. As with the above exclusions, whether the exclusion applies to violations of orders will require a case-by-case analysis.
• Employer’s Liability. GL policies will not cover claims by an employee alleging they contracted the virus during the course of their employment. They also typically exclude coverage for claims by the relatives of that employee resulting from claims that the employee was injured on the job. These types of claims are usually routed through and handled by the workers’ compensation insurance system.

In sum, GL policies may provide coverage for certain personal-injury type claims arising from COVID-19 exposures, and insureds should consider all of their policies when reviewing claims related to COVID-19.