Covid experience shows importance of small print insurance policies – The Royal Gazette



Due to this unforeseen and terribly impacting pandemic climate, owners of commercial industries of all sizes and shapes may spend more time reviewing their business interruption insurance policies and general liability insurance to plan. reduction in coverage.

Is it covered? The pandemic has led to a multitude of legal cases leading to disputes between insurers and policyholders

Such financial recourse depends on the defined coverage of the original insurance contract – the primary concern of course being whether a catastrophe (peril) is covered or excluded.

Generally, regardless of the type of insurance policy, they all share four basic elements:

1, who is it for? Identification, location of the property or the insured person, name of the policyholder.

2, what is it and what does it cover? It is a legal agreement (contract), a promise to pay losses according to the risks covered, either specifically named or opened when the policy covers all risks except those excluded. Perils under insurance descriptions are considered events (accidents) and the list is quite long: lightning, hurricanes, theft, fire, water damage, etc.

3, what did he not cover? Exclusions – perhaps the most important of the four, because the more definitive the number of exclusions, the clearer the understanding of the agreement’s coverage.

4, What are the execution conditions? Both the insurer and the insured have rights and duties which are contractually defined for performance.

The policy contract between the insurer and the insured must clearly and unambiguously define all conditions, protections, exclusions, responsibilities, obligations, etc.

The language of insurance contracts can be difficult to navigate, although the industry has streamlined verbiage and processes in the digital age as an evolution necessary for satisfied customers, efficiency, and to mitigate litigation.

Words have various meanings, as do legal interpretations.

Needless to say, the global business impact of Covid has been unprecedentedly long-lasting and devastating to cash flow, both to family households and to commerce. Business owners seeking monetary relief from their insurer may be denied coverage due to possible gaps in coverage when a standard commercial liability or business interruption policy may contain more restrictions / exclusions than expected – so that the insured may interpret the contract differently from the insurer and other reasons.

In the United States, reports from various industries, litigants, legal proceedings, plaintiffs, insurance companies, and more, indicate that litigation over coverage issues related to the Covid pandemic is on the rise.

According to Kelsey Dilday and James J. Leonard, Barnes & Thornburg LLP, The Pandemic versus the Policyholder: Covid-19 and Business Interruption Coverage Claims as of October 15, 2021, hundreds of lawsuits have been filed by policyholders seeking damages for breach of contract, arguing that their insurance policies provided coverage for business interruption and other additional expenses associated with a Covid-19 outbreak at the scene (and associated remediation costs) for which their insurers wrongly refused coverage.

About 500 of these lawsuits have been decided in almost every state in the United States. Unfortunately for policyholders, the tendency adopted by the courts – and particularly in federal courts – is that the interpretation of their policies by insurers is generally correct.

Thus, judgments were rendered against the plaintiff, thus retained for the insurer, or according to the terms of the Bermudan legal system, the insurer “had no case to answer”.

Some policyholders have taken advantage of various interpretations of policies too numerous to be mentioned in the context of Moneywise. The full articles below are worth reviewing, if only to gain a better understanding of how insurance policies work under adverse circumstances, becoming clearer with time and careful consideration.

Perils, exclusions, conditions

It’s time to review your business and personal policies – to fully understand (unambiguously) what those interesting words literally set out in unforeseen scenarios and excluded coverage mean.

There are those who are reading this now and who thankfully think we haven’t (had) this problem. This is fine, but it’s worth keeping in mind that there are risks in everything in life.

We have the means to anticipate the probability of consecutive recourse in order to manage as many as possible.

That’s what insurance is for.

Disclosure: the author has no direct or indirect association with any insurance company or product, other than as an ordinary consumer general home insurance for property, vehicle, health, etc.

Below is an excerpt from Captive: A History of International Insurance in Bermuda by Catherine R Duffy, AIG Country Manager, Bermuda

1940s – Captives emerge as offshore insurance management vehicles

“Long before the whole world knew that the word captive had a special meaning in terms of the insurance industry, oil companies were already using the technique of captivity to consolidate their global insurance. The structure of these agreements would form the basis of a concept that was about to catapult itself into the global insurance arena, ultimately placing Bermuda once and for all on the international insurance map. The origins of this concept were first developed by Standard Oil of New Jersey and then by Shell.

“Ancon, Standard Oil’s (SO) first captive – although not originally labeled as such – has become a strategy developed to set aside reserves against future losses. The concept of captive offshore was intended to insure SO’s tanker fleet during World War II, as commercial insurers at the time refused to provide coverage.

“The Royal Dutch / Shell Group followed up with overseas-trained captives, including in Bermuda, to consolidate, improve the management of pension fund investments of a growing global expatriate workforce without the limitations imposed. by local country regulatory authorities.

“The obvious benefits of creating a captive included retaining liquidity within the corporate group, using purchasing power in the insurance markets, and controlling risk management to improve safety practices, an issue that was / is of critical importance in the petroleum industry. Bermuda was favorable because of the working conditions, ease of communication, political stability and the island’s unique location between Europe and North America.

The references

“The Pandemic Against the Insured: Claims Related to COVID-19 and Business Interruption Coverage”, Policyholder Protection Blog, Barnes & Thornburg LLP,

“Mind the Gap: Coverage Gaps Created by Commercial General Liability Policies”, Policyholder Protection Blog, Barnes & Thornburg LLP,

• Martha Harris Myron, native of Bermuda with connections in the United States, is a skilled cross-border international financial planner, author of The Bermuda Islander Financial Planning Primers, a Google News contributor since 2016, international financial consultant for Olderhood Group Bermuda Ltd ., and financial columnist for The Royal Gazette. All proceeds from these articles are donated by The Royal Gazette to The Salvation Army in Bermuda. Contact: [email protected]



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