The Communicable Disease Exclusion

You may have noticed a new exclusion form on your recent insurance policy renewal.  Several insurance carriers are implementing or strongly considering applying communicable disease exclusions on general liability policies in response to the pandemic crisis. Although some policies already contained some communicable disease-related exclusionary wording, it was more prevalent with excess and surplus carriers (carriers not regulated by the state), but not anymore.

In the absence of a communicable disease exclusion, there is a question of whether the current commercial general liability form would cover a communicable disease-related claim. Would a claim of this nature qualify as an “occurrence” under the existing form definition? Can an insured be held legally liable for disease transmission per the conditions of the policy? How can one identify that a virus was contracted at a specific time, date, and place on an insured’s premises?

Many believe that an overt exclusion clearly relieves the insurance carrier from coverage, for either actual or alleged transmission. Ultimately, many believe that the exclusion shields the carrier’s duty to defend and incur defense expenses associated with communicable disease claims. With so many uncertainties surrounding COVID-19 insurance coverage, one thing is clear: the prevalence of the communicable disease exclusion will increase into 2021 in response to the pandemic.

Form CG2132 (05/09), communicable disease exclusion is an overt removal of general liability coverage for the transmission of communicable disease. Originally the exclusion was created by ISO (Insurance Services Organization) in response to diseases such as the avian flu, SARS, and those caused by rotaviruses. Although the exclusion does not explicitly name any viruses, it suggests that COVID-19 would fall under the umbrella of communicable disease.

Please consult your agent at Professional Underwriters to discuss the impact and concerns further.