Assessing D&O, Business Interruption Coverage in a Changing Environment
Can firms expect to see liability claims arising from the current global pandemic? Lawyers from Jones Day discuss questions on insurance coverage for business interruption costs and potential liability tied to the COVID-19 pandemic. Already, several insurance firms are drawing clear lines. “In an effort to discourage commercial policyholders from pursuing their COVID-19-related business interruption claims, the insurance industry has issued sweeping pronouncements of alleged “no coverage” for such losses,” write Jones Day lawyers in a recent commentary. In a separate paper, the lawyers describe the range of coverages -- business interruption coverage, commercial general liability and other specialized forms of coverage -- that may help insured parties facing third-party and employee claims. The paper also paints a number of scenarios in which D&O policies could cover costs and liabilities from shareholder lawsuits. For instance, shareholders could allege that management failed to develop adequate contingency plans, failed to observe protocols required by governmental authorities, and/or allegedly failed to properly disclose the risks of coronavirus posed to the company’s business and financial performance. While a fund director in her fiduciary role is unlikely to face liability under these claims, fund directors are usually jointly covered in insurance policies with the adviser and other parties who may be the target of such claims.