Long-Term Care / Nursing Home Insurance: Coronavirus Coverage Summarizedshoke2013
Nursing home outbreaks highlight the coronavirus risks in the long-term care healthcare sector. The novel coronavirus and COVID-19 will likely implicate long-term care facilities’ insurance coverage profile in ways that are unprecedented both for the policyholders and their insurers. Long-term care facilities include nursing homes and skilled nursing facilities, assisted living facilities, and continuing care retirement communities. The insurance profile for a long-term care facility may include coverage for general liability, errors and omissions / professional liability, commercial property liability, directors and officers liability, workers’ compensation, employee benefits liability, and commercial auto liability, and it can include endorsements for specialized coverage for situations such as media event expense, disciplinary proceeding defense coverage, and emergency evacuation expense coverage.
Long-term care facilities are likely to face many of the same coronavirus and COVID-19 related claims as other healthcare providers. Due to the outbreaks in nursing homes, long-term care facilities may face liability claims brought by individuals who assert they were infected with coronavirus while on the business’s property or because of some alleged action or inaction by the business.
Commercial general liability (“CGL”) policies provide defense and indemnity coverage to the insured in the event of third-party claims for bodily injury or property damage. CGL policies cover “bodily injury” caused by an “occurrence,” which is usually defined as “an accident, including continuing or repeated exposure to substantially the same general harmful conditions.” A court will determine whether “bodily injury” due to an insured’s failure to prevent exposure to coronavirus is caused by an accident based on whether the injury was foreseeable. Thus, if a long-term care facility had reason to know of a specific risk or did not heed to warnings related to the novel coronavirus, a court may find that bodily injury claims are not accidents. Moreover, many CGL policies include fungi or bacteria exclusions, typically referred to as mold exclusions; nevertheless, these exclusions are not likely to apply to coronavirus / COVID-19 claims because it is a viral infection and not bacterial. However, although not as common as in commercial property coverage, there are CGL policy exclusions related to communicable diseases and viruses. Notably, many CGL policies are written on a “claims made” or “claims made and reported” basis, which impose strict limitations allowing coverage only for claims first asserted against the insured and noticed to the insurer during the policy period or within an “extended-reporting period.” Therefore, long-term care facilities must evaluate their CGL coverage when first learning of a potential third-party claim, to ensure that any timing requirements are satisfied.
Workers’ compensation insurance may apply with respect to similar claims for bodily injury brought against a long-term care facility by its own employees. Despite the fact that workers’ compensation coverage generally excludes coverage for illness such as the flu, if an employee can establish a direct causal connection between their COVID-19 diagnosis to their workplace, there is an argument for workers’ compensation insurance coverage. As a general rule, the employee would have to show that he or she was exposed while working and that the job presented a peculiar risk of exposure, beyond the risk to the general public.
In addition to CGL and workers’ compensation insurance, many long-term care providers also have errors and omissions (“E&O”) insurance and directors and officers (“D&O”) insurance. E&O insurance is commonly referred to as professional liability coverage. Professional liability policies cover losses related to claims alleging that errors were made when providing or failing to provide medical services. D&O policies may provide coverage for the costs and liabilities arising from shareholder lawsuits related to how the company responded to the coronavirus.
However, like CGL policies, E&O and D&O policies may contain exclusions for coronavirus-related claims. Additionally, also like CGL policies, E&O and D&O policies are commonly written on a “claims made” or “claims made and reported” basis, which again impose strict limitations allowing coverage only for claims first asserted against the insured and noticed to the insurer during the policy period or within an “extended-reporting period.” Therefore, long-term care facilities must evaluate their coverage when first learning of a potential claim, to ensure that any timing requirements are satisfied.