Page 32 - The Insurance Times July 2020

hospitality, education, health care, entertainment, and from physical damage on the premises of a named or
event planning are especially hard-hit, but most unnamed supplier. Finally, some supply chain and CBI policies
manufacturing and service activities are being disrupted. In may also cover loss of services to the insured business, such
recent years, the insurance industry has cut back on as loss of utility services. Limited coverage may also exist
coverage available for pandemic diseases, introducing new for loss of markets for your own products. Importantly, CBI
or broadened exclusions and applying strict sub-limits to insurance commonly covers only losses stemming from
contain insurer exposure. Nonetheless, pockets of coverage disruptions from specific suppliers scheduled in your policy.
continue to exist. It is important to make revised assessment Moreover, CBI coverage usually requires that the supplier
now of your own business's vulnerabilities and of the suffer the type of property damage that would be covered
insurance you may have to address for blocking/minimizing in the insured's own first-party policy. As discussed above,
your future losses. this would typically require an actual contamination event
to trigger coverage. CBI insurance may well be endorsed
Position of business interruption insurance with the same bacteria and virus exclusions noted above.
policies needed by corporate:
Many businesses carry Business Interruption (BI) insurance In case of event cancellation insurance policies:
as a component of their first-party property insurance or as Some of the insured may carry specialized Event
a freestanding policy. BI coverage protects against losses Cancellation coverage. Variants of this type of insurance exist
sustained due to periods of suspended operation due to in the sports, entertainment and event planning industries
property damage. In most cases, contagious diseases do not (including convention planning). Such coverage may be
constitute property damage, especially when passed from written expressly to include specific insurance against
person to person. Actual contamination of tangible property cancellation because of infectious diseases. Nevertheless, we
(as distinct from fear of contamination) may constitute are learning that some insurers have already begun to insert
property damage for insurance purposes. Likewise, endorsements to exclude coronavirus into this coverage.
contamination in HVAC systems has been held to constitute Policies written before the end of 2019 are unlikely to
such property damage. If actual contamination of property contain such exclusions. If you have purchased express
forces your business to shut down facilities or assets, with coverage for infectious disease cancellations, be sure to
concomitant losses, BI coverage may respond. But there are check your policy to assure that no coronavirus endorsement
important limitations: has been added without your agreement.

In recent years, particularly in the aftermath of the SARS Good marketing prospects for issuance of
epidemic, many insurers added specific exclusions for various 'liability' policies:
bacterial or viral infections to their coverage. We have seen Many policyholders face a risk of liability for failing to protect
both stand-alone Bacterial Exclusions and combined others from exposure to infection on their premises.
Bacteria/Virus Exclusions. It is important to understand that Providers of health care, transportation or hospitality
viruses are not bacteria. If your policy only excludes coverage services and retail establishments may be particularly
for bacteria, you may still have coverage for the coronavirus. vulnerable. Your general liability policies cover liability for
Insurers can also be expected to argue that their standard bodily injury and property damage, and primary Commercial
pollution exclusions apply to bar coverage. Whether viruses General Liability policies will usually provide a legal defense
or bacteria are pollutants is a controversial question to which against such claims. Insurers with a duty to defend should
no settled rule yet applies. Specific policy wordings sometimes meet that obligation if there is even a possibility of coverage
provide relevant definitions. for the underlying liability. Do not overlook this coverage if
you face third-party claims, and do not back down if your
Situation of supply chain insurance products: insurer pushes back on the duty to defend.
Some businesses have purchased supply chain insurance or
Contingent Business Interruption (CBI) insurance to protect Companies may also face claims for losses that do not
against losses stemming from supply chain disruptions. involve bodily injury or property damage. Professionals may
Policies exist to cover interruptions of deliveries of raw face claims based on failure to meet a duty of care that may
materials, parts or supplies, and specialized insurance has be covered under Errors and Omissions insurance, and some
been written to cover vulnerable industries, such as health companies or their managements may face claims for
care providers, the hospitality industry and manufacturers. financial losses resulting from mismanagement of their
CBI insurance covers economic losses, typically including response to the pandemic, which may be within the
increased costs, from lost or reduced operations resulting coverage of Directors and Officers policies. It pays to be

32 The Insurance Times, July 2020