Carriers Need to be Prepared for Creative Covid-19 Claims
Prepared by Christina May Bolin
May 1, 2020
A quick survey of the COVID-19 complaints that have been filed to date shows something that may be unexpected by the insurance industry. The cases that are getting filed as class-actions are not necessarily being filed by your typical policyholder attorneys. In fact, some of the litigation is being filed by attorneys who specialize in areas wholly outside of coverage and insurance. They are being filed and generated by attorneys who make their living suing corporations and obtaining settlements for their class members in things like coupons or vendor credits. What does that tell us? The plaintiff’s bar is thinking outside the typical insurance box. If carriers are seeing insurance claims filed by lawyers who do not typically do insurance, they are likely to start seeing non-typical insurance litigation claims.
While there is a great deal of uncertainty as to whether COVID-19 related BI claims will be ultimately insurable, carriers need to start evaluating the potential that claims are going to be made in other coverage areas. If a commercial policy has a virus exclusion and a claim denial seems a certainty, the insured is still going to look for alternative ways to recoup its losses. A more creative way to do that would be through coverage under a D&O policy. Lawyers that are well versed in suing large corporations know that a breach of fiduciary duty claim under a D&O policy is not going to have the same limitations on coverage as a direct action against the carrier under a commercial property policy. We should expect to see (and perhaps more importantly, be prepared to defend) claims against corporate Directors and Officers for breach of fiduciary duty in failing to provide adequate insurance; failing to take proper protocols to protect employees, or failure to initiate timely shutdowns or reopens to minimize production losses. There are numerous claims that could arguably be made. As with any claim, the issue at the onset is not so much whether the claim will be ultimately successful, but rather whether it is sustainable such that a lawsuit can proceed. The sustainability of these suits translates indirect costs for carriers and the insurance industry needs to be prepared.
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