THE BARNES WALKER EDUCATIONAL SERIES
Does COVID-19 Fall Under Insurers’ Pollution Exclusions?
What Realtors® & Other Business Owners Need to Know
In our March 31, 2020 article, we discussed the possibility of your business having coverage from losses resulting from closures due to the Coronavirus (COVID-19) pandemic. Since the issuance of statewide and municipal stay-at-home orders, the insurance industry has seen an influx in first-party (insured) claims as a direct result of COVID-19; however, there is the possibility that third-party claims may drastically increase. This article explores how COVID-19 may be treated under liability provisions and exclusions specifically intended to cover or exclude environmental and pollution claims.
As stay-at-home orders begin to lift, businesses, including your own, will open to patrons and clients. Unfortunately, COVID-19 remains a threat; yet, businesses must be able to function for our economy to thrive.
Reopening a business during a pandemic presents a unique concern. The United States remains the most litigious society in the world, spending roughly 2.3 percent of gross domestic product or roughly $429 billion a year on tort litigation; with Florida spending over 2.7 percent of its State gross domestic product.1 Recently and by way of example, cruisegoers initiated an action against Princess Cruise Lines in March 2020 claiming that the company knew “at least one of its passengers from the prior voyage … had symptoms of coronavirus, and yet it made the conscious decision to continue sailing the voyage that began February 21, 2020 with another three thousand passengers on an infected ship.”2 Similar to Princess Cruise Lines’ exposure, businesses that allegedly fail to implement proper safety protocols, or fail to follow their own safety, cleaning and investigative protocols while operating during a shutdown, may run the risk of claims from COVID-19 customers and clients. Without more claims examples, it is unclear how insurance companies will treat such claims and/or whether those losses will be covered.
Most of the liability policies under which such anticipated COVID-19 claims will be made have a pollution exclusion that insurers must review to determine if the COVID-19 claims are akin to excluded pollution claims.3 The inquiries to be analyzed when determining if COVID-19 may fall into a typical liability pollution provision are the following: (i) does the provision treat a virus as a pollutant; and (ii) does the pollution provision at issue apply if the contamination is caused by something other than natural environmental factors?4 Your specific insurance policy will need to be analyzed with your insurer to determine whether the policy contains definitions of “pollutant,” “pollution hazard,” “pollution condition,” etc., to determine whether COVID-19 may fall under one of the specific definitions.5 Courts, policyholders and insurers alike have yet to encounter COVID-19 and its status as a pollutant in general and professional liability policies.6 Nevertheless, a review of some of Florida’s case law can provide some insight as to whether COVID-19 could be a deemed pollutant.
Florida Federal Courts have likened the Coxsackie virus to contaminants such as raw sewage, battery acid, indoor allergens, living organisms and microbial populations, all of which have been held to be excluded from coverage under a pollution exclusion.7 In addition, a Federal Court determined mold to be a pollutant and excluded from coverage under the pollution exclusion.8
Courts across the United States have yet to have the opportunity to address whether an individual’s claim for contracting COVID-19 due to an improperly sanitized facility is in the realm of a “pollution” claim.9 An analysis of your policy will be crucial to determine if “virus” is included within your pollution provision, and even if your policy does not contain the term “virus,” it is possible the Florida Court will need to determine whether COVID-19 claims fall within the specific category to be determined a pollutant. If your insurance company denies coverage for your claim, you may still be entitled to coverage. If your request for coverage gets denied, you should contact a lawyer to determine if you have any potential claims against your carrier.
If you have any questions about “Does COVID-19 Fall Under Insurers’ Pollution Exclusions? What Realtors® and Other Business Owners Need to Know,” and the coverage issues discussed in this article, please do not hesitate to call us at (941) 741-8224 or e-mail us (just use the first letter of an attorney’s first name followed by his or her last name at BarnesWalker.com). As always, we will answer your questions (within reason) at no charge.
Important Note: The information contained in the preceding Barnes Walker Educational Series article is summary in nature, does not cover all aspects of the law as it pertains to property insurance coverage, and is sent for educational purposes only for the benefit of clients, sellers, buyers, and members of the Realtor® Association of Sarasota and Manatee, Inc., of which we are a proud affiliate member. This article should not be considered as legal advice for anyone’s situation nor is it intended as specific or detailed advice, as we do not have any information specific to anyone’s circumstances. Further, the preceding article is not intended to be an all-inclusive discussion of property insurance coverage, but a guide to the same, and there may be other matters not described in the article that may impact someone’s particular situation. Therefore, always seek legal advice regarding your unique circumstances. Finally, this article is intended as a public service and is not a solicitation seeking legal employment of our firm by anyone.
1 Amanda Bronstad, US Tort System Costs $429B, but Plaintiffs Get Just 57 Percent of That, Report Says,
http://law.com/2018/10/25/us-tort-system-costs-429b-but-plaintiffs-get-just-57-percent-of-that-report-says/ (Oct. 25, 2018).
2 Elise Allen, Does COVID-19 Fall Under Insurers’ Pollution Exclusions?,
https;//www.law360.com/articles/1258620 (Apr. 8, 2020).
3 Id. at 3.
4 Id. at 4.
7 Id.; First Specialty Insurance Corp. v. GRS Management Associates, Inc. No. 08-81356-CIV-MARRA, 2009 U.S. Dist. LEXIS 72708, at *13-14 (S.D. Fla. Aug. 17, 2009).
8 Id.; Nova Cas. Co. v. Waserstein 424 F. Supp. 2d 1325 (S.D. Fla. 2006).
9 Id. at 5.