The coronavirus is currently causing a lot of uproar. Many companies are reviewing their risks in case of infection or are trying to mitigate damage caused by canceled events and trade shows. In this context, the following insurance law issues are of relevance:
If there is a suspected case among a company’s workforce, the temporary closure of the company’s affected part may quickly follow – either out of the employer’s duty of care or on official instructions.
Regrettably, there is no insurance cover for such business interruptions under the usual insurance regimes. Common business interruption insurance policies cover property damage that must have been caused by an insured risk. Such property damage is lacking in the case of virus-induced business closures. The same applies to modules linked to insured property damage in other parts of the business or even at suppliers.
More rarely, there are explicit business closure insurance policies in which closures due to notifiable diseases and pathogens are specifically insured.
Additionally, insurance cover against business interruption due to infections is usually available in the healthcare sector. Clinics, for example, are able to take out insurance against closures for the purposes of disinfection. Insurance cover may also be provided within the scope of event cancelation insurance.
Damage caused by force majeure is excluded from insurance cover in many terms and conditions.
In literature, such clauses are considered permissible (W. Schneider in: Höra, Münchener Anwaltshandbuch Versicherungsrecht [Munich Lawyers; Handbook Insurance Law], 4th edition 2017, Section 29, para 312).
Force majeure is considered by jurisdiction to be an external event that has no connection to business, whose effect cannot be averted even by exercising the utmost care reasonably expected, and which was not foreseeable at the time of entering into the contract (Federal Court of Justice, March 12, 1987, VII ZR 172/86, BGHZ 100, 185; Cologne Higher Regional Court, March 18, 1992, 16 U 136/91, NJW-RR 1992, 1014).
The concept of inevitability implies that these are events which, according to human insight and experience, are unforeseeable in the sense that they or their effects cannot be prevented or their effects cannot be rendered harmless to a tolerable degree by the utmost care expected in the circumstances, despite the use of economically acceptable means (Federal Court of Justice loc.cit.).
Whether a flu virus traveling around the world falls under this definition in the age of globalization (as argued by Führich, VersR 2004, 445, 446) or is part of general life risk will still have to be decided by the courts in individual cases. As a rule, the burden of proof for the exclusion rests with the insurer.
In the case of the SARS pathogen, Augsburg Labor Court had presumed the existence of an epidemic and thus “force majeure” to exist (Augsburg Labor Court, November 09, 2014, 14 C 4608/03).
Since individual conditions may differ greatly, especially in their details, it is always worthwhile to take a close look at the contracts.
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