Canadian Underwriter

Defying The Grinch may cost your clients home insurance coverage

December 11, 2020   by David Gambrill

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Are your clients tempted to defy The Grinch who stole Christmas and have large holiday gatherings during the pandemic regardless of what public health orders might say?

You might want to tell them about pandemic exclusions in their home insurance policies.

Personal injury lawyer Nainesh Kotak, based in Mississauga, Ont., appeared on CTV’s Your Morning Friday and warned about the legal consequences for Canadians who flout public health restrictions by hosting Christmas parties this year.

“You can be sued if somebody comes to your home and catches COVID, and it can be established that…it came from your home, one of your guests, or from yourself,” Nainesh told CTV. “The one big issue is going to be whether your home insurance will cover you if such a situation happens. Some insurance policies in Canada have provisions that exclude communicable diseases. In other words, if you catch it and you spread a disease, you’re not going to be covered.”

The issue about personal liability for spreading COVID, and how a home insurance policy might respond, came up this fall in the context of parents wishing to set up “pandemic pods” for educating their children during the pandemic. A pandemic pod involves inviting a small group of children, or even a tutor or teacher — a pod — into the house to learn together.

At the time, Brooke Hunter, president of Hunters International Insurance, urged brokers to make their clients aware of any possible policy exclusions related to contagious diseases. “You would be taking on forms of liability that won’t be insured,” Hunter said of clients planning to establish pandemic pods.

She sent examples of several home insurance policies to Canadian Underwriter that contained exclusions for “contagious diseases.” One policy, for example, excluded liability claims for “the transmission of any communicable or sexually transmitted disease, including Acquired Immune Deficiency Syndrome…by any person insured by this policy.”

“I’d say COVID is communicable, wouldn’t you?” Hunter asked rhetorically of the policy language in an earlier interview. She went on to note that she didn’t know how liability for the novel coronavirus could be covered under the language of most exclusions in homeowner policies.

Nainesh added that the lack of policy coverage may pertain to more than just damages that can be proved. In the context of flouting public health and government orders, for example, home insurance policies might not cover the legal costs to defend the action in the first place, whether the action is successful or not.

Apart from communicable disease exclusions, Nainesh warned, homeowners planning to hold large holiday gatherings in spite of government-ordered lockdowns should also be aware of other exclusions typically found in their insurance policies.

“The other things to watch for is that there are other exclusions in insurance policies for criminal acts, or intentional acts, or unlawful acts,” he said. “You really have to look at the policy. Because if you allow people into your home, there are certain areas of the country that are in a grey zone, and you simply cannot do it. So if you do that [invite people over for a celebration], you really run the risk that, if something happens, including the spread of COVID, your insurance company may not cover you…

“Is it worth taking that chance? Probably not.”


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