July 8, 2020
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COVID-19 Insurance Considerations for Healthcare Providers, Including Long-term Care Facilities – Tips for Identifying and Pursuing Coverage Claims
The ongoing pandemic resulting from the coronavirus or COVID-19, has had a dramatic effect on healthcare providers, including long-term care facilities, resulting in significant financial losses and liability claims. Contrary to what insurers and many brokers may tell you, these COVID-19-related losses and liability exposures may be covered under standard property and casualty and liability insurance policies. You should therefore carefully review all potentially applicable insurance policies to determine whether a financial loss or actual or threatened claim may trigger coverage, and if so, take steps to properly notice, document and pursue the claim.
Pandemic-Related Exposures and Potentially Applicable Insurance Policies
COVID-19 has affected all aspects of healthcare and long-term care facilities, and poses risks running the gamut from direct financial losses to liability claims by employees, patients, residents and guests. Examples of these exposures and the insurance policies that may potentially cover them include:
Will You Be Able to Choose Your Own Defense Counsel?
The answer is, “maybe.” First, if you have negotiated with your liability insurer to endorse the policy to name your law firm as approved counsel, they will be allowed to defend the claim or suit. Many insureds do not take advantage of this opportunity, and should consider doing so during the annual renewal process. Second, your liability insurer may agree to assign your legal counsel to defend the claim. This often inures to the benefit of both the insurer and the insured. The insured’s normal counsel is well versed in the company’s business and is much better positioned to efficiently and successfully defend the claim than “panel counsel” assigned by the insurer. Third, even if the insurer initially assigns panel counsel, the insured may be legally entitled to independent defense counsel of its choosing. This may be the case where (1) the insurer reserves a right to deny coverage or (2) the amount of the claim exceeds the policy’s limit of coverage. In these situations, the insurer may have a conflict of interest preventing it from controlling the defense. The insured should therefore carefully review any reservation of rights letter issued by the insurer, and where appropriate, insist that it be allowed to appoint independent counsel at the insurer’s expense.
What Should You Consider Prior to Renewing Your Coverage Program?
Many insurance carriers are now attempting to add virus exclusions to existing insurances policies upon renewal. The insured should work carefully with its broker to identify any proposed changes in coverage, particularly those that would limit the insurer’s exposure for potential claims.
Prior to renewing claims made policies, the insured should consider providing notice of a circumstance that may result in a future claim. The benefit of doing so is that where the insurer accepts the notice of circumstance, and the claim is asserted during a later policy year, the claim will be adjusted and paid under the policy in force at the time the notice of circumstance was submitted. This helps preserve future liability coverage limits for new claims and avoids coverage issues where the insurer added new exclusionary language (e.g., a virus exclusion) on renewal.
Finally, as noted above, you may wish to consider requesting that the insurer endorse the policy to identify your law firm as approved defense counsel. This will avoid any question about whether you will be entitled to have your regular legal counsel defend claims or suits that may arise under the policy.
For more information, please contact Rick Kubler or your regular Lathrop GPM contact.
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