Insurers Are Refusing to Renew Unless Insureds Agree to Infectious Disease Endorsement
With the COVID-19 pandemic raging all around us, most policyholders are focused on filing claims for business interruption and extra expense under their property policies – and well they should be – those claims are timely and appropriate. However, insureds should not be distracted from other important business coverages like commercial general liability (CGL) and umbrella excess (UMB), which may be coming up for renewal. Policyholders need to pay attention to the terms of renewal. Insurers are beginning to condition CGL and UMB renewals on the insured’s agreement to accept an infectious disease endorsement, and the proposed endorsements are drafted very broadly.
Here is an example:
Liability Endorsement
The following exclusion is added to this policy and replaces any similar exclusion contained therein. The use of the words damages, loss, cost or expense in any exclusion does not expand any coverages under this contract.
Exclusion Endorsement
With respect to all coverages under this contract, this insurance does not apply to any damages, loss, cost or expense arising out of any:
- condition, disease or sickness shown in the Schedule Of Excluded Diseases, including any similar or other condition, disease, injury or sickness related thereto, by whatever name known;
- causative agent of any condition, disease, injury or sickness described in subparagraph A. above, regardless of whether such agent gives rise to any such condition, disease, injury or sickness or any other condition, disease, injury or sickness, by whatever name known; or
- actual or attempted counseling or testing for, or containing, detoxifying, mitigating, monitoring or neutralizing of, or responding to, or assessing the effects of any:
- condition, disease, injury or sickness described in subparagraphs A. or B. above, including any:
- actual or attempted cure, diagnosis, prevention or treatment of any such condition, disease, injury or sickness;
- actual or attempted cleaning up, disposing, handling or removing of any such causative agent; or
- failure to perform any of the foregoing.
- causative agent described in subparagraphs A. or B. above, including any:
- actual or attempted cure, diagnosis, prevention or treatment of any such condition, disease, injury or sickness;
- actual or attempted cleaning-up, disposing, handling or removing of any such causative agent; or
- failure to perform any of the foregoing.
- condition, disease, injury or sickness described in subparagraphs A. or B. above, including any:
Subparagraphs A., B., C.1.a, and C.2.a. above do not apply to a condition, disease or sickness described in the Schedule Of Included Disease.
Schedule of Excluded Diseases
Any communicable or infectious disease
If an insurer refuses to renew without the inclusion of an infectious disease endorsement, policyholders are not without recourse. A good broker can shop the market and provide the policyholder with alternatives. However, this process can be lengthy and complicated. Here are some tips to avoid being trapped into accepting an infectious disease endorsement:
- begin the renewal process extra early;
- demand to know the exact terms of renewal, including any proposed new endorsements;
- don’t renew unless all of the proposed endorsements are filled out (when the endorsement above was first sent to the policyholder, the Schedule of Excluded Diseases was blank);
- if the renewal is conditioned on the attachment of an infectious disease endorsement, ask the broker to shop the market for other options; and
- consider extending the policy term to keep the current insurance in place while alternatives are explored.
Query: why do CGL and UMB insurers find it necessary to impose infectious disease endorsements on their renewing insureds? Most likely because they know current policies are not drafted to preclude claims for negligence arising out of the presence of COVID-19. As the economy opens further, COVID-19 claims likely will rise. The ASL Team will continue to monitor these claims, analyze the proposed endorsements, and develop strategies to assist policyholders at renewal.
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Amy Stewart Law assists corporate policyholders with strategic advice relating to pre-litigation claim negotiations and coverage denials, indemnity and insurance provisions in third-party contracts, insurance procurement and renewal issues, and complex and high-stakes insurance coverage and bad faith litigation. The firm was recognized for its expertise in insurance law with a Tier 1 ranking for the Dallas-Fort Worth Metropolitan Area in the 2020 Best Law Firms list published by U.S. News & World Report and The Best Lawyers in America. Contact us at inquire@amystewartlaw.com for more information.