Commercial General Liability Insurance Coverage for COVID-19 Lawsuits

In this time of medical and economic uncertainty, one thing is for sure – lawsuits alleging injury and damage from the coronavirus pandemic are inevitable. While the country remains in lockdown – schools and businesses are shut down, employees are working from home and everyone is practicing social distancing and self-quarantine – lawsuits have already begun. Examples include a suit by two nonprofits against U.S. Immigration and Customs Enforcement seeking the release of immigration detainees, a class-action by a lawyer in Texas against China for allegedly causing the coronavirus pandemic, a petition by the State of Missouri for a Temporary Restraining Order against a televangelist for selling a false coronavirus “cure” and a lawsuit by six families against Princess Cruises for allegedly failing to protect passengers from exposure to the virus. This is only the beginning.

Challenges for Business Owners

The Princess Cruises lawsuit hints at what is to come for business owners making business and personnel decisions against a rapidly changing landscape. Cruise lines, airlines, hospitals, nursing homes, academic institutions, commercial property owners and other similarly situated businesses will almost certainly see a marked increase in litigation relating to their response to the coronavirus pandemic, and allegations that these businesses were somehow negligent or wrongful in their response. Potential claims may include that a business negligently failed to protect or to warn third parties against the risks of infection; or wrongfully quarantined an employee or tenant; or disclosed private information, resulting in physical injury, emotional distress, loss of use of property or personal injury.

Considerations for Insurers

While first-party commercial property insurers will certainly see a rise in claims (see related article), insurers who issue commercial general liability (CGL) policies to commercial entities will also see an increase in claims as business owners seek coverage for the influx of lawsuits.

Importantly, not every claim will necessarily be covered. “Coverage A” under CGL policies cover accidental “bodily injury” and “property damage”. Coverage, or the lack of coverage, will vary significantly depending upon the specific policy language, claim, and alleged facts. For example, while an action may seek damages for alleged bodily injury or property damage and potentially be covered under Coverage A, such damages are only covered if the alleged injury or damage was caused by an “occurrence,” i.e. an accident, and an exclusion does not apply to preclude coverage. Exclusions for expected or intended injury, workers compensation, employer’s liability, pollution, damage to property, damage to impaired property, access or disclosure of confidential or personal information and data, and perhaps even virus or communicable disease, may ultimately foreclose coverage for many claims under Coverage A.

“Coverage B” in CGL policies cover certain enumerated “personal and advertising injury” offenses. Lawsuits stemming from preventing exposure to coronavirus may seek damages for injury arising out of an offense under Coverage B such as false detention or imprisonment, wrongful eviction and publication of material that violates a person’s right of privacy. However, exclusions for contractual liability, breach of contract, pollution and distribution of material in violation of statute may very well apply to preclude coverage for such suits.

Please contact an attorney in Rivkin Radler’s Insurance Coverage Practice Group for assistance in navigating coverage for coronavirus liability claims.