As businesses reopen, companies should be prepared for a potential wave of lawsuits from customers and employees who may claim to have contracted COVID-19 on their premises. As a result, companies should carefully review their insurance policies to see what coverage might be available for such claims.
General Liability Insurance
A company should look first to its general liability policies to cover any lawsuits brought by customers who claim to have contracted COVID-19 and allege that the company negligently exposed them to the virus. These policies usually include a duty by the insurer to defend the insured in any such lawsuit and would cover the defense costs as well as the damages arising from the lawsuit.
Professional Liability Insurance
Professional liability, also known as errors & omissions insurance, provides coverage for professionals in lawsuits where the plaintiffs allege the defendant breached a professional standard of care. Hospitals, healthcare workers and other health organizations could face claims alleging that they negligently failed to implement appropriate safeguards or apply the appropriate standard of care to protect their residents from COVID-19. Specialized professional liability policies, such as medical malpractice insurance, could also provide coverage for these types of lawsuits.
D&O insurance provides an array of coverage for third party claims made against individual directors and officers, as well as the company itself, for business judgment decisions. Private companies generally have broad coverage that would likely be triggered by negligence-based claims involving COVID-19 (for example, negligence in risk mitigation, preparedness and response to COVID-19). D&O policies may also extend to government investigations and inquiries, depending on the wording of the policy, which could provide coverage for SEC investigations and claims under the False Claims Act, which we expect to stem from COVID-19.
Workers’ Compensation Insurance
In addition to lawsuits brought by customers, many companies are already facing potential lawsuits from their employees. Generally, employees who suffer such injuries would be limited to workers’ compensation benefits as states have established workers’ compensation insurance as the “exclusive remedy” for work-related injuries and bar employees from suing their employers directly for such injuries, with certain exceptions. At the moment, it is unclear if workers’ compensation would provide coverage for employees in all instances as for many cases an employee would need to prove a direct connection between the workplace and their illness, which would often be difficult to prove.
Employers’ Liability Insurance
Under most state laws, workers’ compensation may be the only source of recovery for employees who contract COVID-19, limiting the employer’s potential liability. However, many states have some limited exceptions to this “exclusive remedy” rule, including, e.g., lawsuits for intentional injuries, gross negligence in fatal accidents and fraudulent concealment. Companies often have employers’ liability insurance to provide coverage for employee injuries that is in excess of what is covered by workers’ compensation, including the defense costs for any employee lawsuits. In these circumstances, companies should look to their employers’ liability policy for additional protection.
In addition, as employees return to work, employers could face various claims from employees, including, e.g., retaliation for taking leave or asking for a reasonable accommodation to work from home, age and disability discrimination for refusing to accommodate employees who are more at risk for serious complications from COVID-19, discrimination or harassment allegations by Asian American employees, and discrimination or hostile-work environment claims based on COVID-19 diagnosis. These claims may be covered by EPLI, which provides coverage for defense costs and damages arising from various employment-related wrongful acts.
General Liability Insurance
General liability insurance also might provide coverage for employee lawsuits brought against third parties, where the third party looks to the employer for contribution or indemnification. General liability policies typically contain employer liability exclusions that exclude employee bodily injury lawsuits, but general liability insurance may provide coverage for these third-party lawsuits for contribution or indemnification.
At this point, it’s not clear what kind and type of lawsuits companies will be facing as employees return to work, so now is a great time to review all applicable insurance coverages to be better prepared for the future.
About Harrison Oldham
Harrison grew up in Mansfield, Texas. He attended Texas A&M University for his bachelor’s degree, where he met his wonderful wife, Kelsey. After graduating magna cum laude from Texas A&M, he attended SMU Dedman School of Law, graduating with honors in 2012. Today, Harrison and his wife live in Dallas, Texas with their son, Teddy.
Since graduating from SMU Law, Harrison has worked exclusively in the field of business law. He has spent time in private practice and in-house, working with clients of every size; from single person startups to Fortune 250 companies. Today his practice focuses on serving the diverse needs of businesses and individuals throughout Texas. You can learn more about Harrison by visiting his website, at: http://