The present circumstances and business closures related to COVID-19 are clearly affecting all aspects of both our professional and personal lives. When discussing commercial general liability coverages at renewal, your clients will likely ask you whether there would be coverage if a customer or visitor alleges to have been infected at their business. Similarly, insurers may, for the first time, introduce certain endorsements at your client’s renewal. The potential effect of any such restrictions would depend upon the particular risk involved- a restaurant or retail operation with a considerable client base as compared to an office building with fewer people traveling though the premises.
These are all issues which you will need to be prepared to address with your clients. In Florida, an insurance broker has a duty to procure the insurance coverage that is requested by its client or warranted under the circumstances. Wachovia Insurance Services, Inc. v. Toomey, 994 So.2d 980, 987 (Fla. 2008.) Further, an insurance broker can be held to even a higher standard if a “special relationship” is created utilizing certain criteria. Tiara Condominium Assoc., Inc. v. Marsh USA, 607 F.3d 742 (11th Cir. 2010.) In this regard, an insurance broker is therefore required to use reasonable skill and diligence in procuring the necessary coverage. Warehouse Foods, Inc. v. Corporate Risk Management Services, Inc., 530 So.2d 422 (Fla. 1st DCA 1988); Sheridan v. Greenberg, 391 So.2d 234 (Fla. 3d DCA 1981). Accordingly, it will be the broker’s responsibility to explain these issues if they arise during the renewal process.
In this regard, the first question to answer is whether an alleged infection claim would be covered by a typical commercial general liability policy. Pursuant to SECTION I- COVERAGES, 1. Insuring Agreement (b), the policy applies to ‘bodily injury” which is caused by an “occurrence” and an “occurrence” is defined in SECTION V. – DEFINITIONS, 13 as “an accident, including continuous or repeated exposure to substantially the same general conditions.” With that in mind and considering that the term accident is not a defined term, coverage will likely exist for such claims subject to the other terms, provisions and conditions of the policy. As coverage and legal liability are inextricably intertwined, it would appear, however, that a claimant would face a considerable burden to establish that your client was the precise source of any infection exposure unless your client knew of an infection source at its business and/or failed to comply with a government directive, for there to be an impact on coverage.
For this reason, an insurance broker should anticipate certain requested coverage modifications in the future. It is likely that an underwriter may wish to include the Communicable Disease Exclusion endorsement (CG 21 32 05 09) which excludes coverage for “bodily injury” arising out of the actual or alleged transmission of a communicable disease. This exclusion would apply to both indemnification and defense coverage for any claim and therefore it is essential that you carefully discuss this potential change with your client and carefully document your file accordingly, in the event that any issues arise in the future.
If you have any questions or would like further information as to how we can assist you, please contact Gary R. Shendell at firstname.lastname@example.org
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