Senior Living Nuggets: COVID-19 Expected Insurance Response

Published by Tray Traynor, CIC


We understand you have been inundated with recommendations on how to respond to COVID-19 from multiple sources.  So as not to duplicate any information already sent, the purpose of this next Senior Living Nuggets white paper from Pritchard & Jerden is solely to provide commentary on how the P&C insurance market for senior living operations is currently expected to respond to COVID-19 in the coming months. Please let us know any questions or concerns.


General Liability/Professional Liability

Most of the insurers writing GL/PL for senior living operations do not specifically exclude losses from “virus” or “communicable diseases.”  If included, coverage would be found under the Professional Liability section, not the General Liability portion. We anticipate a wave of lawsuits from the plaintiff bar will come against senior living providers (of all types). The suits will claim Bodily Injury (CV-19 infection) due to negligence or not following either the established guidelines or the newly passed guidelines in response to COVID-19.

The proper defense to any future claim of this nature is to ensure your communities are not only following the infection control policies already in place, but are also following the new and interim guidelines handed down by CMS/CDC over the last two weeks. Identifying at least one senior-level employee to lead compliance, and documenting as much as possible are also important steps.

At your next renewal, expect insurers to require a separate COVID-19 specific application and for some to add an automatic exclusion for any Bodily Injury liability related to COVID-19 irrespective of your operations or controls.


Workers’ Comp

Historically, claims for illnesses (bird flu, SARS etc.) have not been compensable under Workers’ Comp insurance. However, that could potentially be different for healthcare workers making illness claims from COVID-19.  The two litmus tests for Workers’ Comp compensability are:

  1. Did the illness arise out of and from the scope of employment
  2. Is the illness “peculiar” to the specific work the employee was doing when infected/injured

Pandemics affect the general public, therefore one could argue that COVID-19 is not peculiar to any particular work. The counter-argument is healthcare workers most certainly have a higher exposure to COVID-19 by coming face-to-face with infected persons daily.

On March 5th, the state of Washington set a precedent by declaring that healthcare workers and first responders will receive Work Comp benefits during the time they are quarantined after being exposed to Coronavirus on the job. It will be interesting to see if other states follow suit.



The insurance marketplace for EPL and D&O is beginning to tighten – some carriers have even stopped writing new business as it relates to EPL, and D&O could soon follow. Expect to see COVID-19 limitations and/or exclusionary endorsements within future policies. To that end, some carriers have now come out with their own supplemental applications specific to COVID-19.  Lastly, should any unfamiliar employment situations arise from COVID-19, we recommend reaching out to your carrier’s EPLI hotline for advice or speaking with your employment attorney.


Business Income

At this time there doesn’t appear to be coverage for Business Interruption (BI) due to virus-related events like COVID-19.  BI coverage requires a physical loss on an insured’s premises from a covered cause of loss.  Business slowing down, or closing to stop the spread of Coronavirus is unfortunately not a coverage trigger – even when Civil or Military Authority ordered the shutdown.  It is, however, a fluid situation as some lawmakers in Washington are pushing for a federal backstop for insurers to eventually provide BI coverage from COVID-19 as a potential Part 4 of the stimulus package.  The current estimate for the amount needed to backstop total BI losses from COVID-19 is $5 trillion.

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