20/20 Vision: Why Insurance Doesn't Cover the COVID-19 Pandemic

I am doing the final edit on my new book "Why Insurance Doesn't Cover the COVID-19 Pandemic: 20/20 Vision." It is currently available on a discounted pre-sale on Amazon. The ebook will be officially released, fittingly, on Halloween, October 31 (trick or treat?).

Below is a description of the contents plus some excerpts.

DESCRIPTION....

THE Definitive and Conclusive Analysis of Why Insurance Doesn't Cover Pandemics

This book by one of the industry's foremost P&C insurance coverage experts explains why potentially trillions of dollars of COVID-19 business interruption losses should not, can not, and are not covered by insurance.

The book explains why pandemics are uninsurable while dispelling other industry misconceptions, from fundamental misunderstandings about how insurance works to the myth that "all risk" policies cover anything not excluded.

It also explores why policyholder lawsuits to date have been largely ineffective and offers recommendations to both plaintiff and defense attorneys as well as suggestions about insurer claims handling and why there is a right and a wrong way to offer coverage broadenings and premium rebates.

But the heart and soul of the book is the section based on the author's 50+ year industry career detailing how common policy language responds to COVID-19 claims. The book includes comparison charts showing the evolution of standardized policy language for over 30 years and explains how a change in business income civil authority coverage almost 20 years ago both broadened and restricted that coverage.

Included in the coverage analysis is a definitive examination of recently debated issues such as what constitutes "direct physical" property damage or loss and an explanation of why almost everyone misunderstands how the civil authority coverage works and why. With regard to the "direct physical" issue, the author points out insurance contract language that few have considered as a basis for understanding and interpreting what this term means.

In addition to the in-depth business income coverage analysis, the book addresses a number of coverage complications that have arisen from the pandemic and provides an overview of the COVID-19 impact on other lines of coverage such as general liability, workers compensation, directors and officers insurance, and even personal lines. Also, with regard to errors and omissions exposures, insurance agents are cautioned as to why they may be the target of a second wave of litigation.

In addition to coverage issues, the book devotes a chapter to regulatory directives and legislative mandates, including an explanation of why a TRIA-like federal "PRIA" proposal is unlikely to work in the case of pandemics.

Finally, the book concludes with a chapter on lessons learned and an exploration of risk management approaches other than insurance that might be reasonable solutions to future pandemics.

EXCERPTS....

“The pro-coverage articles are generally long on emotion and short on substance. Many are emotional opinion pieces that consider virtually nothing that the subject insurance contracts actually say. These articles are pleas for coverage by those engaged in wishful thinking who, when they even mention policy language, torture it in order to get it to confess to something it didn’t do.”

“As discussed earlier in this book, the “all risks” moniker has stuck even though ISO dropped the word ‘all’ in 1983, decades ago. Old habits die hard but the misleading claims today that ‘anything not excluded is covered’ demonstrates why some things besides viruses need to die of their own accord.”

“The reality is that these are public health orders that have little or nothing to do with real property damage, as would be the case in an order prohibiting access to an area following a disaster like a tornado or hurricane. Public health orders are not the subject of civil authority coverage.”

“What is the plain and ordinary meaning of ‘repaired, rebuilt or replaced’? Does spraying Lysol or another disinfectant or using a Clorox wipe constitute ‘repair, rebuilding or replacement’? Would a restaurant owner or manager tell an employee, ‘Take this disinfectant and ‘rebuild’ those dining room tables’?”

“As the photos earlier in this book illustrate, if a restaurant suffers a kitchen fire, charred wood doesn’t self-heal. This very real damage has to be repaired or replaced. On the other hand, SARS-CoV-2 simply resides on a surface until it dies without a viable living host or is removed by simply cleaning with a disinfectant spray or wipe. It does not alter the surface in any material way, but rather is a superficial, temporary condition that can be remediated relatively quickly and inexpensively with common household disinfectants, including soap and water. Wiping down table tops in a restaurant is very different from a meth lab cleanup.”

"We do not believe that the Michigan courts would find basic cleaning to constitute physical loss or damage." — Universal Image Prods., Inc., v. Federal Ins. Co.

“The words ‘repair’ and ‘replace’ contemplate physical damage to the insured premises as opposed to loss of use of it.” — Newman Myers Kreines Gross Harris, P.C. v. Great Northern Ins. Co.

"This means that, if we construe ‘direct physical loss or damage’ to require actual harm, it gives effect to the other provisions in the policy. And that is exactly what Florida law requires us to do so that no section of the insurance policy is left meaningless." — Malaube, LLC v. Greenwich Insurance Company

“The complaint repeatedly refers to ‘actual presence of COVID-19’ on premises ‘that has caused physical damage to property’ without offering any evidence of such presence or damage. The policy has a contamination exclusion and the complaint repeatedly states that the exclusion ‘does not exclude coverage for….’ without offering any rationale for that conclusion, reminiscent of a familiar movie line, ‘These are not the droids you’re looking for.’”

“[T]o provide an illustration distinguishing ‘loss’ from ‘damage,’ my residence was hit by a tornado in 2013. Of twenty-six window shutters, six were damaged and three were completely missing. So, I had ‘damage to’ six shutters and a ‘loss of’ three shutters. That’s what the business income form means when it says coverage is triggered by ‘loss of or damage to’ property.”

“Many, likely most, policyholder lawsuits insist that ‘loss of’ property includes ‘loss of use’ of property, not its damage per se nor its complete disappearance. If an insurance form covers ‘loss of use,’ it will usually say so using that verbiage. The premise that ‘loss of’ also means or includes ‘loss of use of’ is a fictitious construct and yet another example of torturing insurance contract language to get it to confess to something it didn’t do.”

“[S]peculative theories of recovery, in lieu of documentation and hard evidence, will likely not sway juries, much less judges. The strength of the policyholder’s case begins with the initial pleading.”

“I think the best advice for plaintiffs is to minimize the unpersuasive emotional appeals and stick to the contract issues at hand. That means avoiding generalizations, selective editing, and misrepresentative coverage hyperbole by citing the precise policy language. It also means addressing facts and not presumptions, speculations, or wishful thinking about the presence of viral contaminants. Finally, assertions should be backed up by logic and reason and, where appropriate, by relevant case law citations, not broad references that require the court to do the work of the plaintiff’s attorney, as opined in Malaube, LLC v. Greenwich Insurance Company.”

“Each of these conclusions will be supported by policy language and logic that is based on specific forms and facts, along with foundational tenets of insurance.”