Chris Teske and Alexis Joachim’s article detailing the unexpected consequences of prolonged business closure in the insurance industry was published in the Fall edition of DRI’s In-House Defense Quarterly. The article focuses on coverage issues under property and liability policies related to COVID-19 related business closures and stay-at-home orders. The closure of schools, office buildings, shopping centers and other businesses presents the potential for property damage caused by vandalism or theft committed against vacant properties and their contents that can lead to significant first party coverage claims for damage to the property and loss of its contents. The lengthy closure of certain properties also presents the potential for secondary contamination and the spread of infectious diseases such as the development of biofilm that causes diseases like Legionella in water systems that are not seeing their typical level of use or the accelerated growth of molds and fungi in buildings where HVAC systems are not properly maintained. Returning occupants, including customers and students, may well have liability claims against the insured if the building is not properly cleaned and protected before it reopens for business. While many of the coverage issues discussed in the article have already been addressed in the context of closures caused by other natural and man-made disasters such as hurricanes and wildfires, the infectious disease component of the COVID-19 related closures could change the way that courts nationwide view coverage for these unexpected consequences.
A downloadable copy of the article is presented below or you may click here to open in a browser window.