Covington ' s Watson said that insurers have largely paid out claims under policies that offer communicable disease coverage , which generally provides coverage for business interruption from and expenses for a disease , like cleanup costs .
He added that while most of these policies are sublimited , some have no aggregate sublimit ; if a policyholder owns multiple properties or has multiple occurrences , " there are real dollars at stake , which makes it hard for the insurance company to pay the claim or come to a resolution ."
The impact of the COVID decisions is also reverberating in other areas of the law .
" The concept of physical loss or damage comes up in other contexts , so court decisions in the COVID context could potentially affect that ," Pastor said .
A Massachusetts federal court ruled in August that AMAG Pharmaceuticals could not obtain coverage for losses from mold particles dispersed through an air leak . To back up its reasoning , the court pointed to a state court ruling that found COVID ' s presence on property didn ' t constitute physical loss or damage if it could be removed by a simple cleaning .
COVID case law may not prove to be an easy weapon for insurers to wield in other battles .
In May , New York ' s Supreme Court rejected the argument from a group of Lloyd ' s of London syndicates that their policy language around " physical loss and / or damage " was sufficiently similar to COVID policies to deny coverage to jewelry retailer Tiffany and its vendor for the loss of precious metals .
Policyholders Put on Notice for Future Risks For policyholders , future solutions may involve a deep probe of the past .
Pastor noted that insurers appeared strategic and aligned in their arguments and in presenting COVID coverage cases that they wanted courts to consider first , while early claimants were represented by capable plaintiff-side attorneys who didn ' t do as much insurance coverage work .
" I think some of the early decisions reflected an imbalance in terms of defendants / insurers who are aligned and plaintiffs / policyholder-side counsel who did not have the same coordination in terms of their efforts and longstanding experience in the area ," she said .
Watson cautioned that insurers may try to replicate that pattern to nip claims on emerging risks in the bud .
" I think the insurance industry is going to feel like they got a lot out of their effort to quickly , on the pleadings , get resolution of these cases and to do it around the country , and create that wave of anticoverage momentum ," he added .
Part of avoiding similar outcomes may lie in more careful underwriting , Shargel said , advising policyholders to enlist experienced risk managers or outside counsel to carefully review renewals and policy language , such as coverage for events arising out of diseases like government mandates .
He also said that an upshot of the COVID cases has been the development of parametric coverage , which provides quick payouts to policyholders if certain metrics are met , like infection rates in a