Condo Media - September 2020 - 16

COVID COVERAGE

UNEXPECTED OR PLANNED?
Whether potential exposure to the virus
is an unanticipated risk (which would
be covered) or a foreseeable one, which
would not be, will also be disputed, and
probably more intensely. An example
here would be a suit filed by an owner
who claims to have become infected by
swimming in the community's pool.
Most associations are requiring residents to sign waivers agreeing not to sue
the association if they contract the virus
from using the community's amenities.
Insurers argue that by requiring the
waiver, the association is acknowledging that using the exercise equipment
or swimming in the pool could cause an
infection - making that an anticipated
event that would not be covered.
"A community knows when it decides
to reopen a pool that there is potential
exposure. This is not an unexpected
peril; it's a risk you expect," Joel Meskin, CIRMS, MLIS, EBP, managing
director of community association
products for McGowan Program
Administrators, says.
Marcus thinks that reasoning is
flawed. "Pools have always had warn-

16

CONDOMEDIA September 2020

ing signs about 'swimming at your
own risk,'" he notes. "By the insurance
industry's logic, you could say that if
you fill a swimming pool with water, you
expect that someone will drown. That
is crazy." Requiring COVID waivers
simply recognizes that contagion risks
exist, he explains. "It doesn't mean you
expect that anyone who swims in the
pool or uses the equipment will contract the virus."
A SPECIFIC EXCLUSION
Although Meskin isn't persuaded by
that argument, he acknowledges that
"some courts may be." But the primary
argument against coverage - the exclusion for communicable diseases -
remains. And that exclusion in the CGL
policy, he contends, precludes coverage
both for damages that might be awarded
to successful plaintiffs and for the cost
of defending those claims. The D&O
policy won't provide any coverage either, he explains, because it specifically
excludes claims resulting from bodily
injury or property damage.
What about suits, which many boards
are anticipating, from owners com-

plaining that keeping pools and other
amenities closed because of contagion
risks deprives them wrongfully of the
use of amenities for which they are paying? Meskin thinks the D&O exclusion
for claims "directly or indirectly" related to property damage and personal
injury precludes this coverage too.
The connection between COVID-19
and decisions to open or not open
amenities is clear, he says. "If not for the
virus, the board wouldn't have considered the question. I'd invite anyone to
explain how the board's action doesn't
meet the terms of the exclusion," he
says. "If there's an explanation, I'd love
to see it. I don't think it exists."
Pierce thinks the "duty to defend"
language in many policies may, in fact,
require insurers to cover defense costs
in some cases, depending on how the
policy is worded and on the claim that is
alleged. "If the allegation is the board's
failure to fulfill an obligation and not
bodily injury," he says, "the association
may be able to thread the [exclusion]
needle and get at least some coverage
for defense costs. But these issues
haven't been tested [in a pandemic
scenario]," he cautions, so it is impossible to predict how the D&O coverage
question will be resolved.
A "BIZARRE" RESPONSE
Marcus thinks the insurance industry's
insistence that there is no coverage for
COVID-19 claims should be tested.
The standard response to coverage
questions, he notes, has always been
"read the policy," reflecting the assumption that coverage will depend on the
nature of claim and the wording of the
policy. The blanket assertion that no
policy will provide any coverage is, in his
view, not just inconsistent with industry
tradition, but "bizarre." Most COVID
coverage denials will probably be "accurate and proper," he agrees. "But some
claims will be wrongly denied," because
of the nature of the claim, the wording
of the policy, or both. "It is the wrongful
denials that concern me."
Marcus is concerned obviously
about condominium associations, that,



Condo Media - September 2020

Table of Contents for the Digital Edition of Condo Media - September 2020

Contents
Condo Media - September 2020 - Cover1
Condo Media - September 2020 - Cover2
Condo Media - September 2020 - Contents
Condo Media - September 2020 - 2
Condo Media - September 2020 - 3
Condo Media - September 2020 - 4
Condo Media - September 2020 - 5
Condo Media - September 2020 - 6
Condo Media - September 2020 - 7
Condo Media - September 2020 - 8
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Condo Media - September 2020 - 11
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Condo Media - September 2020 - 16
Condo Media - September 2020 - BB1
Condo Media - September 2020 - BB2
Condo Media - September 2020 - 17
Condo Media - September 2020 - 18
Condo Media - September 2020 - 19
Condo Media - September 2020 - 20
Condo Media - September 2020 - 21
Condo Media - September 2020 - 22
Condo Media - September 2020 - 23
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Condo Media - September 2020 - 48
Condo Media - September 2020 - Cover3
Condo Media - September 2020 - Cover4
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