Risk & Business Magazine JGS Insurance - Fall 2020 | Page 31

BUMMER SUMMER
and attorneys alike have relayed to clients
directly or through countless webinars,
protocols to protect their members and the
associations from possible suits, underlining
that the optics of those efforts are critical.
Recommendations such as cleaning
amenities and restrooms several times a
day with approved cleaning products (and
asking patrons to leave during cleanings
to ensure thoroughness), hiring a separate
individual to enforce COVID-19 guidelines,
storing pool furniture for the year and
asking members to bring their own
chairs to eliminate at least one hightouch
surface, installing hand sanitizer
stations and signage, requiring masks
at all times unless swimming, removing
pool toys and kickboards, disallowing
guests, disallowing alcohol use, posting
and updating the association’s cleaning
efforts and frequency, and continuing to
encourage social distancing, have been
provided to insureds. Many Associations
are making use, too, of carefully crafted
waivers, though the effectiveness of
waivers remains to be seen and are likely
worthless for those under 18 since parents
may not sign away their minor children’s
rights. The reality is that associations,
agents, carriers, and attorneys alike are
simply waiting for claims.
The news has been rife, of course, with
stories of denied business interruption
claims, and the restaurant industry, in
particular, has responded with class
action suits in an effort to counter longexistent
policy language that excludes
business interruption loss when there is
no property damage.
Where General Liability is concerned, the
burden of proof rests with the claimant
who alleges contraction of the virus
from a business owner’s premise, but
carriers’ policy forms that presently have
no embedded or endorsed language
excluding virus and bacteria loss may
have a duty to defend under certain
circumstances. That said, the “expected
and intended” provision in most if not all
liability policies may be triggered given
the pandemic situation.
Policy exclusions were to be expected
from an insurance industry that never
intended or charged premium for a
pandemic the proportion of COVID-19.
By the end of August, the number of
confirmed US cases had well surpassed
5.85 million, and the number of
deaths had exceeded 180,000 – and by
publication date, those grim numbers
will be grossly dated. The randomness
of who gets sick and recovers and who
does not lends to the fear and uncertainty,
and young people age 18-49, previously
thought to have less severe cases when
they did contract the virus, were the
group most frequently testing positive,
responsible for surges in cases in Florida,
Texas, and coastal towns. By the end of
August, no fewer than 30 states – 60%
of the country – were among a growing
list seeking to avoid increasing their
case numbers by requiring people to
quarantine for two weeks if they were
traveling from a state with a daily positive
test rate higher than 10 per 100,000
residents or a state with a 10% or higher
positivity rate over a seven-day rolling
average.
With carriers having filed and obtained
approval for communicable disease/virus
and bacteria exclusion endorsements
(some being applied with an insured’s
renewal as early as July 01), the best
hope for community associations and
businesses, arguably, is federal legislation
that would allow for temporary and
specific liability relief, since claims remain
likely despite even the most strenuous
cleaning and social distancing controls.
Absent federal protections, 12 states (as of
August 27) have already passed individual
liability immunity laws including Georgia,
Iowa, Kansas, Louisiana, Mississippi,
North Carolina, Oklahoma, Tennessee,
Utah, and Wyoming; governors from
Arkansas and Alabama have signed
executive orders. States that have not
passed individual relief must wait until
their next legislative sessions begin, but
bills are being drafted now.
The unknowns of COVID-19, identified
now to have six different strains (and
a questionable duration of antibodies
for those who have had the virus), have
forced many community associations
to simply wave the white flag. While
community associations have largely
been spared business interruption losses
(it’s impossible to shut down the very
places where people live), the possible
coverage gap in General Liability coverage
(and certain exclusion with approved
endorsements) has resigned many
communities to keep their amenities
closed.
According to the Community Associations
Institute (CAI) in Falls Church, Virginia,
some 80% of pools in New Jersey elected
to stay closed for the 2020 season,
followed closely by Maryland at 56%,
and Pennsylvania at 55%. Those states,
along with Texas, California, and North
Carolina cited fear of legal liability as the
reason for their decision, while 42% of
states polled cited an inability to meet
local, state, and federal requirements. An
average of 35% of the associations polled
cited increased expenses.
ACCORDING TO THE
NATIONAL INSTITUTES
OF HEALTH IN
BETHESDA, MD, THE
THIRD PHASE OF A
CLINICAL VACCINE
TRIAL BEGAN IN LATE
JULY OFFERING SOME
ENCOURAGEMENT
THAT A SLOWING AND
CONTAINMENT OF THE
VIRUS MAY BE POSSIBLE.
The reality is, eradication shouldn’t be
expected any time soon, and we should
expect ongoing restrictions in the coming
months. As many school districts have
opted for virtual learning this fall, colleges
have canceled football seasons, and
many businesses continue work-fromhome
protocols, how communities work
within the “new normal” framework and
make decisions in the best interests of
their associations will be a critical risk
management litmus test to be certain. +
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