COVID-19 Insurance and Liability Questions


1. Are there any new insurance policies or endorsements available that would protect business owners against claims made by patrons, guests, or employees alleging exposure to and/or infection of the virus at their properties?

There are no new insurance coverage or endorsements/riders available for business owners that would protect them against such claims. While there has been discussion about the need for this type of coverage and possible insurance market opportunities, the lack of data including COVID death, hospitalization, and infection rates creates a huge problem for potential underwriters. Brokers and insurers are seeing a huge interest in buying COVID coverage, and people are now willing to pay considerably more than 0.5% rate online for it. Ideally from an insurance/reinsurance perspective, this policy would be excluded from all covers and then written as a buy-back, a standalone pandemic cover.

Some insurance companies offer existing Pandemic Event Specialized Coverage. Pandemic event policies insure companies against pathogen-related business interruption events and are aimed at providing coverage for those who experience financial damages from business interruption during pandemics. Lloyds of London, for example, implemented a specific policy that covers damages for a pandemic event like this following the Ebola outbreak.

Still, even if a business had purchased this type of expensive coverage, it may not cover COVID-19 claims. In fact, a movie theater chain recently filed a lawsuit against Lloyds of London alleging the insurer “anticipatorily repudiated” coverage by advising the chain’s broker that COVID-19 is not covered under their pandemic event policy, because it isn’t a named disease within the plan.

Despite the lack of COVID-specific endorsements/riders, our clients may have one or more of the below policies that could potentially cover COVID-related claims.


Currently there are no markets that will provide new coverage for losses resulting from the COVID-19 pandemic, including all Non-Physical Damage Business Insurance or Parametric products. Yet some clients may have a policy for hospitality or retail under “Loss of Attraction,” “Communicable Diseases” or “Special Perils Business Interruption” which may provide COVID-19 coverage. In addition, some insurance companies created pandemic endorsements in response to the Spanish flu.


A Commercial General Liability policy (CGL) “provides coverage to a business for bodily injury, personal injury, and property damage caused by the business’ operations, products, or injury that occurs on the business’ premises” for which the insured is legally liable. Liability for COVID-19 or any similar outbreak could arise out of an insured’s failure to protect individuals and or their property against infection with such viruses.

In general, the standard CGL form does not exclude coverage for such diseases, but note that the exclusion for cover could be added on by endorsement in the form of a communicable diseases or within the Pollution Liability exclusion of the CGL, depending on the policies definition of “pollutant.”

An Environmental Impairment Liability policy is designed to provide coverage for an insured who becomes legally obligated as a result of bodily injury, property damage and first party cleanup costs as a result of a pollution condition at or arising from the insured’s location. While the definition of pollutant varies slightly by carrier, there are some carriers who include virus as a defined pollutant.

Worker’s compensation carriers are handling coronavirus claims in the same manner as those associated with the standard flu. Under most states’ workers’ compensation statutes, employees are entitled to benefits for “occupational diseases,” while “ordinary diseases of life” that the general public is equally exposed to are typically excluded. This means that COVID-19 claims are non-compensable unless the claimant works in a vulnerable field such as healthcare and can prove the illness was contracted at work or while travelling for work. As COVID-19 becomes more widespread, this burden of proof will become increasingly onerous. However, some states, including Illinois and Kentucky, have started to shift the burden of proof from the worker to the employer. Under an order from Illinois Gov. J.B. Pritzker, essential workers at businesses such as grocery and hardware stores would have “the presumption that the workers that are essential caught the disease at work.” The company would then have to demonstrate otherwise. Late last week, however, a county judge issued a temporary restraining order blocking the rule after business groups filed a lawsuit opposing it. It is also important to note that in most states, employees who can file a claim through workers’ compensation must take that route and relinquish the right to sue.

Professional Lines:

Directors and officers (D&O) policies provide claims-made coverage, typically covering companies for shareholder lawsuits and individuals for claims made against them while serving as a director or officer of a company. These policies protect against the insured’s “wrongful acts,” which are typically defined as the insured’s errors, omissions, misstatements, misleading statements, neglect, or breach of a duty. A company and its directors and officers may face lawsuits alleging that their unreasonable actions (or inaction) in response to the COVID-19 pandemic caused economic loss to stakeholders. For example, a contractor, donor, recipient of services or regulator may contend that management failed to observe protocols recommended or required by governmental authorities, failed to develop adequate contingency plans, or failed to properly manage the nonprofit’s investment portfolio. D&O policies may provide coverage for the costs and liabilities arising from these stakeholder lawsuits.

Error and Omission policies (E&O) are intended to cover claims resulting from allegations relating to a company’s professional services, whether it is a company installing fiber optic lines for increased work-at-home capabilities, a fund manager or investment professional handling clients’ financial portfolios, or medical practitioners’ or medical institutions’ care of patients. The range of possible liabilities resulting from COVID-19 that may be covered under an E&O policy depends largely on the type of professional service provided by the company. For claims relating to a company’s services, or failure to provide services, E&O policies may be the most applicable insurance policy.

2. What liability does an employer/business owner face if an employee/customer gets infected with COVID-19 and alleges the office was not cleaned properly or the employer did not implement safe distancing protocols?

Personal injury, negligence, and premises liability claims are a risk for any business that remains open and invites patrons or employees onto its premises during the COVID-19 pandemic. The type of business will likely dictate the standard of care. While there may be no precedent or specific guidance from courts on the standard for maintaining premises in the face of coronavirus, premises owners should expect that courts may use the governmental guidance for containing the spread of coronavirus infection in their jurisdiction to define the standard of the required duty of care. Thus, it would be prudent for owners to factor in the guidance and recommendations from the various federal, state, and local institutions for preventing or minimizing coronavirus infection.

It is worth noting, however, that in a premises liability case, the claimant will likely have a substantial hurdle proving that he contracted the infection at the accused’s premises. Indeed, the Occupational Safety and Health Administration (“OSHA”), which governs the employer-employee relationship, has recognized that “in areas where there is ongoing community transmission, employers … may have difficulty making determinations about whether workers who contracted COVID-19 did so due to exposures at work.” To that end, OSHA relaxed the burden on employers to make work-relatedness determinations (required for injury reporting purposes under OSHA), except where there was “objective evidence,” such as spread of infection among individuals who worked closely together, and such “evidence was reasonably available to the employer.” Thus, based on OSHA’s perspective at least, the claimant’s burden to show that he was infected at the accused premises will not be trivial in most cases. It remains to be seen whether courts would apply OSHA’s reasoning in a premises liability case.

Premises owners may also face negligence per se claims. The impact of negligence per se varies by state, with differing courts finding that it creates a presumption of negligence, a rebuttable presumption of negligence, or just evidence of negligence for consideration by a jury. COVID-19 plaintiffs may allege that ignoring state-imposed “shelter-in-place” orders and social distancing guidelines establishes negligence per se against premises owners, as these orders often mandate or recommend the temporary closing of non-essential businesses. But this argument faces a major constitutional hurdle, as these types of orders are typically issued by state executive branches under their police powers. Since the executive branch is generally constitutionally prohibited from creating law, shelter-in-place orders and social distancing guidelines will not likely serve as a basis for negligence per se claims.

As mentioned above, workers compensation would apply in these situations as well. It is important to note that most tort claims for monetary damages filed by employees against their employers will most likely be barred by applicable workers’ compensation statutes.

Current litigation involving workplace exposure to COVID-19

In Illinois, the family of a Walmart worker who died of coronavirus sued the retailer in early April, alleging the company didn’t do enough to protect its workers from the disease. The complaint alleges that Walmart failed to close the store even though it knew or should have known that employees and others at the store had COVID-19 symptoms. It further alleges that Walmart failed to prevent employees with COVID-19 symptoms from working at the store. The plaintiffs also allege that Walmart hired people over the phone or by other remote means without evaluating whether the prospective employees had symptoms of the virus. The final allegation is that Walmart failed to clean and sterilize the store, failed to provide employees with personal protective equipment, and failed to promote and enforce social distancing.

In Missouri, a nonprofit workers group sued Smithfield Foods in federal court on behalf of its workers after a coronavirus outbreak at a Smithfield plant in Milan sickened several employees. The suit alleges Smithfield workers were forced to work without adequate protective equipment, “shoulder to shoulder,” were not given opportunities to wash their hands, and were discouraged from taking sick leave and given bonuses for working while sick. The suit also alleges Smithfield had not implemented a plan for testing and contact-tracing workers exposed to the coronavirus. According to the suit, Smithfield’s operations at the plant could result in a spread of the coronavirus throughout the surrounding area unless further action is taken. As a result, the plaintiffs ask for the plant to be declared a “public nuisance” and for Smithfield to be forced to change its policies.

The Walmart plaintiffs were able to circumvent the workers’ compensation mandate because they are charging gross negligence, while the Smithfield plaintiffs are relying on a novel “ public nuisance” argument and aren’t seeking damages.

As with traditional negligence claims, the defense to this type of claim may focus on government guidelines and infectious disease protocols. In addition, the U.S. Chamber of Commerce is among several business groups asking Congress to set a federal standard that limits liability for employers who follow CDC guidelines.


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