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11 May 2020

Professional Indemnity or Public Liability? Covid19, Customers, and Your Business.

Women with masks

With so much of the world starting to open up in response to the recent Covid 19 coronavirus pandemic, there is still a lot of uncertainty out there. Some issues, like whether will be a secondary spike or wave of infections later this year remain to be seen, but without a doubt the virus is still out in the community. With many countries around the world, including here in Hong Kong, considering loosening restrictions meant to control the spread of the virus there is a very real fear that community spread may spike again.

This poses an interesting problem for a lot of business owners and companies; especially as they begin to open up, and customers start to come back and interact with employees.

In recent weeks we’ve discussed the implications of the Covid-19 Coronavirus towards Employees Compensation Insurance. We’ve done that specifically with reference to: A) how does your employees compensation insurance cover your employees while they are working at home (if it does so at all), B) what happens if your employee catches Covid-19 through the routine course of their employment and is it a claimable event?

In this article we’re going to be talking about scenarios and insurance products that could come into play if your customers (rather than your employees) claim to have caught the Covid-19

Coronavirus because of your staff or your business.

This is going to be a very hot topic for certain businesses; but has the potential to impact many different types of companies. All businesses are at risk, in the current climate of uncertainty and fear, of having the claim leveled that they gave a customer the Coronavirus.

”I caught Covid-19 because of your business”

People are scared, and litigious by nature; when someone feels like they’ve been wronged they will normally demand some form of compensation. Its important to note here that the individual doesn’t necessarily have to actually have been wronged – they are able to level a claim or charge of malfeasance against you or your business based on their feeling.

Whether the claim of negligence or wrongdoing is warranted or not, your business will still need to fight the accusation if the “injured” party is determined to bring it to court. This costs time and money; time and money that cannot easily be spared in the midst of the global pandemic. If the claim of negligence, or wrongdoing is successful then the expense is increased when fines and regulatory sanctions come into play.

When it comes to the Covid-19 Coronavirus the reality is that there are myriad ways in which an individual could have contracted the disease, and in a majority of cases claimants will have a tough time proving that any single business or organization was responsible for giving them the disease. However, a creative, and motivated individual may be able to make the case that your organization is responsible for their Coronavirus situation; leaving you exposed.

Professional Indemnity and General Liability Insurance

There are really only two Hong Kong Insurance products that even begin to have the capacity to cover claims that your business has given a customer the Covid-19 Coronavirus; Professional Indemnity Insurance and General/Public Liability Insurance.

At this point it is important to understand that we will be talking about these products in a hypothetical sense. CCW Global is making no reference to any existing policy or plan, but is providing information which may be pertinent in helping you make better decisions about your coverage.

Ultimately the terms and conditions on the specific coverage you hold, your company’s industry, your geographical location, the material facts involved in the claim, and the insurance company you purchased your policy from will all play a big part in whether or not your Professional Indemnity or Public Liability insurance plan will cover your business against a claimant alleging that you gave them Covid-19.

Public Liability Claims and Covid-19

Of the two possible areas in which businesses may see insurance activity for Covid-19, Public Liability Insurance is the more realistic candidate for actually having an impact on your business.

Public Liability Insurance, also known as General Liability or “Third Party Liability” is designed to protect your business against claims brought forth by third parties (parties other than the company being insured and the insurer). Depending on the type of Public Liability policy your business holds, the plan is designed to protect the company against liability up to a stated financial limit should the claim be a covered event. In instances where a legal suit is filed by the claimant, Public Liability policies can also pay the normal and necessary legal costs needed to mount a defense until the policy limit is reached.

The important aspect of Public Liability Insurance is the issue of whether the claim of harm by the claimant is caused by an “occurrence.” An occurrence is generally defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

So, when it comes to Public Liability insurance the big question is, is it an occurrence of an insured individual in failing to fully, and to the utmost best of their ability prevent exposure from Covid-19?

There will, undoubtedly, be cases that say it does.

This is the primary consideration for Public Liability Insurance and Covid-19 and these claims, when they occur, are going to face legal challenges over long periods of time. Ignoring the fact that there are, commonly, exclusions on Public Liability insurance products for Communicable Diseases and organic pathogens, or even the fact that there is no egregious behavior on the part of the insured which lead to the accident (which would otherwise normally be part of the expectation in a public liability claim), there are a host of considerations peculiarly related to this insurance and the coronavirus.

Does the supermarket which fails to sterilize its shopping trolleys adequately qualify for a legitimate public liability claim? Does the hedge fund who sends a sick employee out to meet a client?

What, exactly, would qualify for insurance support on a Covid-19 claim largely depends on your public liability insurance policy. But, more importantly, it would depend on the manner in which the claimant made their case – they may not have won a judgement but can still cost an organization large amounts of money dealing with fighting the claim. Barring a pandemic exclusion on the policy, which would exclude Covid-19 claims outright, there is a question as to whether any Public Liability products are able to cover the coronavirus situation.

Unfortunately, there is no answer here. There is no quick or easy solution. The only way in which we will find out the scenarios in which Public Liability insurance is able to cover Covid-19 Coronavirus claims is by seeing the claims submitted – and this is only just now starting to occur. It will be many years before we have an answer on this topic, and only then after what (we can reasonably expect) will be years of legal challenges.

Professional Indemnity, Malpractice, and Covid-19 Claims

Professional Indemnity insurance, also known as Errors and Omissions Insurance or Medical Malpractice Insurance for healthcare and affiliated industries, is the second more targeted manner in which it may, in some very unlikely cases, be possible to cover financial losses of a customer claiming that they received the Coronavirus through a business.

While Professional Indemnity is not designed to cover claims where there have been cases of actual bodily harm or injury (which Covid-19 would likely classify as being), in the event of Medical and “soft-medical” businesses which fall on the Malpractice Side of Professional Indemnity, there is the very real chance that this type of insurance could come into play in the near future.

For Doctors, Dentists, Hospitals, and “Hard” Medical businesses, there is the reasonable assumption of sanitization, cleanliness, hygiene, and utmost care when seeking these services. For a minute we’re going to ignore the fact that you could have been visiting the doctor because of Covid-19, or the fact that you may have caught the virus in the waiting room despite best practice efforts on the part of the practitioner (social distancing, sanitizing, rotated scheduling).

It is not unreasonable for us to assume that sometime in the near future a patient will go to the doctor and claim that they were negative before their visit, but became Covid-19 positive after their visit. In this instance, we need to then think about the Tattoo Studios, Hair Dressers and Barbershops, Beauty Salons, Day Spas and Massage Services, all of which should have the same reasonable expectation of hygiene, but all of which by their very nature have far more cross-contact and cross-contamination risk that a business like a shipping clerk (which doesn’t see any client foot traffic).

This is where the unknowns come into play.

There are simply too many variables, for anyone in the insurance industry (again, barring a pandemic or general pathogen exclusion), to say whether a claim of “you gave me Covid-19” would be covered under Professional Indemnity/Medical Malpractice insurance.

In principle there is no reason to think that such claims, for industries under the healthcare umbrella, would not be honored. On first blush, it would appear that these businesses would be protected by their errors and omissions insurance. Again, this will be entirely dependent on the terms and conditions for the specific Professional Indemnity insurance product in question. But the ultimate outcome of any protection, and any claim scenario, is ultimately going to be up to the many legal challenges this situation will bring about.

Hong Kong Business Insurance and the Covid-19 Coronavirus

We are only now beginning to explore the many ways in which the Covid-19 Coronavirus has impacted our daily life, and the ways in which we are protected through various insurance products. From individuals to businesses, almost every class of insurance product worldwide has been affected by the Coronavirus, and not everyone is prepared.

At CCW Global we want you to be secure in the knowledge that your Hong Kong Business Insurance policy will do exactly what you need it to do. If you would like clarification on the coverage afforded to you under an existing Hong Kong Business Insurance plan, our expert insurance brokers would be happy to speak to you about your policy free of charge.

We are also able to arrange comparisons, benchmarking, and free analysis of the various insurance solutions which may best meet your company’s needs in smoothly navigating the Coronavirus Pandemic. For more information about the services we are able to offer, or to arrange a no-obligation, no-cost consultation with an expert Hong Kong Insurance Broker, please Contact Us today.

About Author

Michael Lamb is an insurance industry professional with many years of experience within the Hong Kong Insurance market. Focusing on APAC coverage issues, Michael is able to provide extensive analysis and insight to a range of pressing topics. Previously, Michael provided insurance broker Globalsurance.com with their most highly valued articles and was a key influence in the development of all the content on Pacificprime.com, Michael has a passion for insurance matched by few others in the region.

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