Page 17 - Insurance Times May 2020

expected from Europe, UK, Canada and Australia. In
one case a pharmaceutical company claimed falsely of
developing a vaccine for COVID 19, leading to a
shareholder filing a suit.
3. Non- adherence to instructions of authorities: In
situations like the enforced lockdown, non adherence
to the instructions, affecting the employees, can result
into class action suits against the company as well as
the Directors. This can also attract civil fines and
penalties from the authorities.
4. Lack of contingency planning: Robustness of the
contingency planning of a company, in the wake of COVID
19 outbreak, will be put to test. Inadequate decisions,
lack of preparedness in case of lockdowns, inadequate
technology to continue " business as usual "can all lead Commercial General liability policy:
to potential questioning from the employees, investors,
Many clients might be wondering whether a claim can be
clients, following drop in business results .
triggered under a "Commercial General liability policy ",
5. Employment practices liability claims: Inability of following the outbreak of COVID 19. It is pertinent to
corporate to take adequate actions for the safety at mention here that Commercial General Liability (or a Public
workplace can result in class action or even individual liability policy); being a legal liability policy, the negligence
suits from employees. Even discrimination at work place needs to be proved in the court of law. Even if there is a
(e.g. a group of people be asked to report for duties in negligence , we need to understand that a CGL policy covers
case of lockdown, if proved to be a case of discrimination liability arising out of " bodily injury or property damage "
without any logic) can lead to employee suits. of third party caused by an " occurrence " which has
happened in the insured territory and arising of business
Trigger for a claim for security class action under a D&O activity of the insured.
policy will be an accompanying fall in the share price related
to the COVID 19 outbreak, arising out of the negligence Two aspects which needs to be proved here are
specified point 1 & 2 above. However it is yet to be tested a. Is contacting the virus an "occurrence "and has the virus
how the policies will respond. been contacted within the premises or arising out of
insured's business operation?
In case of unsatisfactory decision making showing the
b. Is contacting the virus a "bodily injury "?
"wrongful acts: as mentioned under point no 4 as above,
will certainly trigger claims under D&O policy.
Only when the above two aspects can be proved in the
court of law and if the policy does not carry a "
Bodily injuries arising out of COVID 19 outbreak cannot be
communicable disease " exclusion ( some policies do carry
a part of the D&O policy but the defence costs can be looked
an exclusion for loss caused by action of pathogenic
at (depending on policy wording ), if the failure to supervise
organisms ), the loss under a CGL policy will be tenable .
is proved . Further mental anguish and emotional distress
can still lead to claims under a D&O policy.
COVID 19 and its impact on Property
Claims under EPLI extension of the D&O policy can be Insurance:
triggered (both on directors as well as entities in case of the World over there have been innumerable debates on whether
following: a. mental distress following lack of pro active the property damage policies ( Material damage ) and in
management of the crisis b. Discrimination if the crisis is particular Business Interruption policies , can come to the
managed differently at different places / with different rescue of the policy holder and pay for the business losses
groups. c financial loss during the period of shutdown / lockdown . The debates and

The Insurance Times, May 2020 17