Twenty-six years ago, I sat in an overcrowded courtroom filled with insurance company lawyers ready to argue that insurance companies should not pay for environmental cleanup costs. A distinguished grey-haired gentleman lawyer, my boss, was leading an assault on the insurance industry. He walked slowly to the podium and said, “Your Honor, you see all of these men and women here in nice suits? They are all liars.” The question American businesses should ask with respect to coronavirus is whether history repeats itself.
The CEO of the insurance giant Chubb, Evan G. Greenberg, stated in a recent WSJ Opinion that it won’t help anyone “to try to pin the damage on insurers like my company.” Decades ago, insurance carriers made this same argument with respect to the environment. There, insurance companies were held responsible, and American businesses were helped greatly. The same will likely hold true for coronavirus losses.
Mr. Greenberg’s is wrong to assert that “virus is not covered.” At a minimum, Mr. Greenberg begs a legal question that will be decided by the courts. Insurance companies willingly and knowingly sold insurance policies covering “all risks.” For decades, if not longer, it has been the law that “all risks” policies cover all risks of direct physical loss or damage unless specifically and unambiguously excluded. And, courts throughout this country have held that coverage is provided in similar situations, where property cannot be used for its intended purposes, or is otherwise rendered unsafe to use. COVID-19 is a covered risk. It has rendered property unsafe and unusable. The presence of Covid-19 alone triggers coverage.
The only question, then, is whether COVID 19 is excluded from coverage. On April 10, President Trump correctly noted that there is a problem with what insurance carriers are pushing, stating:
In a lot of cases, I don’t see it. I don’t see reference, and they don’t want to pay up. I would like to see the insurance companies pay if they need to pay.
No insurance policies, other than those being currently issued, contain COVID-19 exclusions. Some policies address viruses. Others do not. Each policy needs to be individually considered, and in a lot of cases, coverage clearly exists.
Mr. Greenberg claims that it would be “wildly counterproductive” to force big insurance companies to pay for losses they didn’t insure. Insurance companies litigated what they claimed were uncovered environmental claims for decades, only to pay in the end. The failure to pay covered claims is and has always been counterproductive.
Recognizing this, numerous states are considering bills requiring insurers to pay for Covid-19 losses. To this, Greenberg claims protections under Article I of the Constitution. This classic “red herring” distracts us from the fact that most insurance policies address this issue head on. Insurance is a regulated industry, and insurers are contractually bound to follow newly enacted laws and regulations. Constitutional crises avoided.
History repeats itself. We are in for a fight. But, businesses that fight for coverage will be rewarded. See The Good News About Coronavirus Insurance Claims