Coronavirus disease 2019 (COVID‑19) is an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). It was first identified in December 2019 in Wuhan, China, and has resulted in an ongoing worldwide pandemic. As of November 2020, more than 42 million cases have been reported across 188 countries with more than 1.4 million deaths; more than 30 million people have recovered. In the U.S., there have been over 8.5 million confirmed cases and over 225,000 deaths.
COVID-19 and Insurance Claims
As a result of the COVID-19 pandemic, insurance carriers providing environmental pollution liability policies have seen an increasing influx of claims related to COVID-19 on these policies since March 2020. In some instances, alleged losses of several million dollars have been reported on portfolio policies providing coverage for multiple locations. Some of the more common types of locations/facilities for which COVID-19 related claims are being submitted include hospitals and medical networks; nursing homes, elder care and assisted living facilities; colleges and universities; apartment buildings; and commercial office buildings.
Depending on the specific language and details of the insurance policy, some coverage may be afforded for certain costs incurred as a result of a COVID-19 incident or event, most typically when such costs are directly related to disinfection activities. In some cases, this coverage may stem from a definition of “pollutant” in the policy that includes “biological contaminants”, which, as defined by the U.S. Environmental Protection Agency (EPA) with respect to indoor air quality, includes bacteria and viruses. In some policies, a COVID-19 “event” is considered to be the presence of a person or persons at a location covered under the policy who have received a confirmed medical diagnosis as having contracted the coronavirus. In some cases, coverage is only provided for costs incurred within a limited time period (e.g. 30 days) following an “event”.
COVID-19 Insurance Claim Costs
Typical costs submitted pursuant to COVID-19 related claims made on environmental insurance policies include costs for internal or contracted labor to perform disinfection of the areas in which the COVID-19 positive person(s) were present and the purchase or rental of supplies needed to perform the disinfection (e.g. electrostatic sprayers, foggers, disinfectant, wipes, and personal protective equipment such as masks and gloves). Insureds may also submit labor costs incurred for activities other than disinfection that resulted from COVID-19 (e.g. planning and preparation activities performed prior to a COVID-19 event, additional staff training, internal meetings) or for the purchase of supplies not directly related to disinfection. Business interruption losses related to COVID-19 may also be submitted.
Evaluating Reasonableness and Necessity
Evaluating the reasonableness and necessity of the work performed is made more difficult by the current lack of laws and regulations regarding appropriate response protocols to the presence or potential presence of the coronavirus. Currently, the most widely accepted procedures for performing disinfection in response to the coronavirus are guidelines issued by the Center for Disease Control and Prevention (CDC), such as Coronavirus Disease 2019 – Cleaning and Disinfection for Community Facilities – Interim Recommendations for U.S. Community Facilities with Suspected/Confirmed Coronavirus. Other guidance is available from the EPA, the Occupational Safety and Health Administration (OSHA), and local, county, and state Departments of Health. For example, the EPA publishes a list of disinfectants (referred to as “List N“) determined to be effective against the coronavirus. In some cases, disinfectants employed are not on the EPA’s List N and have not been proven to be effective against the coronavirus (for example, UV-C light).
How Can VERTEX Help?
With an extensive staff of Certified Industrial Hygienists (CIHs) and other environmental professionals, VERTEX can assist in the investigation and evaluation of COVID-19 related claims made on environmental insurance policies. VERTEX can provide such services as evaluation of the reasonableness and necessity of the work performed with respect to applicable guidance and current scientific knowledge, assessment of the reasonableness of labor and equipment rates, assessment of the reasonableness of supply purchases and associated costs, and evaluation of whether submitted labor and supply costs are directly related to coronavirus disinfection and demonstrably represent an incremental increase over “baseline” costs normally incurred in facility operations in the absence of a coronavirus event.