As the pandemic unfolds, long term care and similar health organizations are facing new liability exposure. Specifically, a resident may claim or commence an action as against the organization arising from alleged staff negligence causing COVID-19 infection. The exposure may extend to a family member visiting a resident, and who also becomes infected.
Insurers foresee claims under Coverage Part A, Bodily Injury and Property Damage of commercial general liability (CGL) policies. A CGL policy requires legal liability in order to respond. The main requirements are:
- the wrongdoer is determined to be negligent (meaning they breached a duty owed to the injured party);
- the injured party suffers damages; and
- the wrongdoer's negligent conduct is a proximate cause of the injury or damage
In one scenario, a health organization may allow an infected worker to continue performing his or duties. Normally, the infected person would have difficulty proving where he or she became infected. Yet long term care residents have limited community access, allowing the infected person to establish infection by the worker more easily. Family members also have been restricted from visiting loved ones, limiting infection potential from outside the facility.
A typical CGL contains scant exclusion wording in the current pandemic context.
A new underwriting practice now aims to withdraw from coverage “any claim, action, occurrence, accident, loss, damage, injury, cost, expense, fee, charge, fine, penalty, or other amount” alleged to be caused directly or indirectly by a number of contagious diseases listed in the Contagious Disease Exclusion Endorsement. COVID-19, SARs, and MERs are excluded as is “any other strain, derivative, mutation, or variation” thereof.
In the above scenario, if a resident of a long term care home contracts COVID-19 as a result of alleged staff negligence during a policy period in which this endorsement applies, any lawsuit brought by the resident and/or a family member with respect to this contraction would fall outside of liability coverage.
This endorsement may begin with the new policy, but insurers are also likely to add it to any renewal. Legal advice is clearly invaluable where insurers are withdrawing pandemic-related coverage.
The above is general legal advice but can not account for every specific situation. Should you have any questions with respect to this bulletin, or if you would like more detailed information, please contact the Brownlee LLP Insurance practice team.
The insurance industry response to COVID-19