Commercial General Liability Insurance and COVID-19

The COVID-19 pandemic raises many insurance coverage questions for business owners. Insurance products that come into question include property and business interruption insurance, contingent business interruption (CBI) insurance and commercial general liability insurance (CGL).

In the case of CGL, business professionals wonder about their liability for COVID-19 transmission and property contamination. This guide provides an overview of your potential CGL insurance coverage for COVID-19-related liability.

What Does CGL Insurance Typically Cover?

CGL insurance provides business coverage for injury or property damage caused by a company’s products or operations on the business site. It applies to losses from third parties such as customers and other businesses, not employees. Businesses use CGL insurance for protection against claims for:

• Physical injury: If an injury occurs on your business premises, CGL insurance can cover the resulting claim. CGL coverage applies to injuries that happen to clients, visitors and others who experience an injury related to your business.
• Property damage: CGL insurance also covers situations where your business operations or product causes damage to another party’s property. These policies cover property that belongs to customers, individuals and other businesses.
• Personal and advertising injury: In addition to physical damage, CGL insurance protects against claims related to rights infringement and reputation damage. This aspect of CGL coverage applies to a broad range of claims, including those related to slander and advertising that causes a loss to others.
• Defense costs: When your CGL insurance company does not find the other party liable, they will also cover any legal costs incurred if they sue. In many cases, the cost of legal defense in a CGL policy does not count towards the coverage limit.

Does CGL Insurance Cover COVID-19?

In most cases, CGL insurance will not cover coronavirus-related injuries or property loss. You cannot buy coverage on the current market for any losses related to COVID-19. If you have an existing CGL policy, you also have a low chance of receiving coverage.

This lack of coverage means that if you get sued for COVID-19 transmission, you should not count on your CGL insurance. When in doubt, consult your insurance agent about your coverage.

Coronavirus and CGL Exemptions

Since the coronavirus does not constitute physical injury or property damage due to exemptions, CGL will not cover most related incidents. Learn more below about the potential COVID-19 exemptions for each type of case:

• Physical injury: Many injury claims related to the spread of COVID-19 will not receive coverage from a CGL policy. While many standard CGL forms do not exclude disease, they often have separate exceptions for diseases.
• Property damage: CGL policies related to property tend to cover incidents involving the physical loss or damage of property. As a virus, COVID-19 does not cause either of these issues. In addition, many property policies include a contamination exclusion related to diseases and viruses. Most property claims related to the coronavirus will involve contamination rather than physical harm to the property.

COVID-19 and the Commercial General Liability Pollution Exclusion

Some CGL policies without disease exemptions consider COVID-19 a “pollutant” under their pollution liability exclusions. The definition of a pollutant in insurance policy varies by carrier, making this issue unique only to some plans. Some carriers also explicitly include viruses in their pollutant exclusions. Read your plan’s pollution policies to see if they could apply to COVID-19.

Does Business Closure Insurance Cover Government-Enforced COVID-19 Closures?

Business closure insurance does not cover you if the government forces you to close due to COVID-19. Most policies exclude cases where a “civil authority” makes a company close because it does not involve physical damage. Also, most plans will not cover situations where the business closes down as a preventative measure against the coronavirus.

Learn More About COVID-19 and Business Insurance

During these times of uncertainty, you can count on our team to answer any questions you have about commercial insurance in Missouri. At David Pope Insurance Services, LLC, we strive to adapt to updates in the industry, including those related to COVID-19. Since many of our staff members can work from home, we can still offer you the same level of service as before.

If your business has any insurance issues related to the pandemic, we welcome you to contact our team online or call us at 636-583-0800.