9. Insurance Coverage and Disputes

• Pages: 175-197
• Author: Jeffrey R. Teeters

9

Insurance Coverage

and Disputes

Jeffrey R. Teeters1

Businesses are surrounded by risks arising from potential infec-

tious disease outbreaks. Their operations may directly suffer

nancial losses, and their properties may even sustain physical

damage. Meanwhile, their investors may sue for losses, and their

customers, visitors, and employees may sue for personal injury

or economic damages. To the extent feasible, organizations nat-

urally seek to shift these risks through insurance coverage. This

chapter explores the main types of insurance available for this

purpose—as well as common exclusions that make protection a

challenge.

Risk management is a key consideration for anyone who may be

impacted by an infectious disease outbreak. At the forefront of

risk management is insurance coverage. This is true regardless of the

potential source of the disease or who is affected by it. The avail-

ability of insurance will ease the nancial burden when claims and

1. Jeffrey Teeters is a partner and litigator at Wood & Lamping LLP in Cincinnati,

Ohio.

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litigation arise for a defendant, and it may serve as a source of funds

for potential recovery by a plaintiff. The insurance policy itself may

also give rise to litigation when parties’ dispute coverage details.

Knowing what insurance applies, and ensuring its application, can

play critical roles in controlling nancial exposure and preserving a

business’s operational future.

Insurance products have evolved through a variety of infectious dis-

ease events over the years. Each new disease or outbreak seems to gen-

erate a new round of coverage litigation with the opposing sides trying

to embrace or repel the event under existing policies. Not surprisingly,

parties call on the courts to sort out disputes over seemingly every

policy provision. Some insurers then adapt by explicitly excluding

coverage in future policies for these expensive and difcult- to- control

events. Meanwhile, the marketplace draws other specialty carriers to

create new products purposefully designed to offer coverage.

This is particularly pertinent to infectious disease outbreaks.

For example, after the Ebola crisis in 2014–2016, many insurers

expressly excluded coverage for Ebola- related claims. Into that vac-

uum stepped specialty insurance carriers offering Pandemic Disease

Business Interruption Insurance to address government closures and

quarantine- related reductions in revenue.2 Regardless of how cover-

age litigation plays out over the COVID- 19 virus, businesses are well

served to get a full view of existing and emerging insurance products.

The following discussion is aimed at identifying the most likely insur-

ance products to manage risk in advance of an outbreak, as well as the

most likely provisions and terms to be litigated when claims are made.

It is, however, an overview only. Reams of court opinions, decades of

billable hours, and millions in nancial resources have been expended

in debating precision (or ambiguities) of insuring provisions, contrac-

tual denitions, and common law theories surrounding these policies.

As scientic, health, and economic conditions change, so too

does the insurance industry in enumerating exclusions from some

2. Russ Banham, This Insurance Would Have Helped in Coronavirus Crisis but

Nobody Bought It, I J (April 3, 2020), https://www.insurance-

journal.com/news/national/2020/04/03/563224.htm; Hanna Ziady, It’s Too Late

for This Pandemic, But Everyone Wants Insurance against the Next One, CNN

(April 3, 2020), https://www.cnn.com/2020/03/19/business/pandemic- insurance-

coronavirus/index.html.

176 Infectious Disease Litigation

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