Higher Education - Coverage and COVID-19

1 April 2020

As COVID-19 continues to spread across the United Kingdom, higher education institutions across the country are looking for additional insight into the extent of possible insurance cover for claims related to COVID-19. Following is a brief discussion of potential sources of cover.

Since many higher education institutions purchase specific policies and have their own designed programmes, it would not be prudent to make broad policy coverage statements as individual policy forms have their own unique coverage terms and conditions.

We offer the information below as a guide to where institutions may look to their Insurance Programme for possible support.

Employers’ Liability

Liability under this element of cover will, as per any claim, come down to whether or not the disease/illness is considered occupational and whether the institution is legally liable for injuries or disease subsequently incurred. In order for it to be compensable, the disease would have to be contracted during the course of employment due to conditions specific to employee’s work.

Public Liability

Liability policies may respond to allegations that your institution/your employees were negligent in failing to take appropriate steps to protect others from exposure to this virus and such failure caused bodily injury or death.

Pollution exclusions that include the term virus or specific communicable disease exclusions contained in some liability polices may limit coverage. Careful review of coverage terms is essential.

Let’s review an example to explore how cover may apply: A student returns from an overseas trip. Student exhibits no symptoms upon her return, but 8 days after arriving on campus, tests positive for COVID-19. After her return, she attended classes and utilised campus dining facilities on several occasions. In the following weeks a number of students and canteen workers test positive for COVID-19. In this ‘worst case’ example, should those infected by the virus bring a legal action against the institution alleging negligence related to their response, we believe insurers are likely to provide a defence and an indemnity provided in the event the institution is found negligent for their failure to protect students and the public.

Excess Liability

Should follow underlying liability cover unless a specific exclusion has been added.

Environmental Liability

Environmental liability policies could, subject to their terms and conditions, conceivably respond to mandated clean up and disinfecting of facilities arising out of exposure to COVID-19.

Professional Indemnity/Directors’ & Officers’ Liability

A likely exposure for institutions in this area may arise from allegations of event-driven failures. These include allegations such as the failure of the institution to adequately prepare for a pandemic resulting in significant interruption to education, delays in graduation, lost earnings, loss of tuition and fees, etc. As with other claims, legal opinion on the institution’s liability will be a key consideration.

While we find discrimination claims arising out of COVID-19 to be a remote possibility, cover will usually exist under D&O policies.

Property

Our understanding is that the majority of commercial insurers may exclude losses arising from Property Damage &/or Business Interruption.

Where there are cover extensions for costs arising from COVID-19 for decontamination, clean-up and business interruption related to a notifiable communicable disease these will usually be subject to sub-limits (normally £250,000) with specific exclusions and definitions applying to this extension of coverage.

Travel

Since the initial outbreak of COVID-19 in China, the Foreign and Commonwealth Office (FCO) has regularly updated its advices as to the level of risk for travel to certain countries and has continued to update its advices as they monitor the threat. Some countries have instituted preventative measures for travellers that want to visit, are requiring medical clearance before the traveller is permitted to enter the country, or are implementing other measures, including a health quarantine.

Many insurers have stated they will judge claims on their own merits with the usual rule of thumb being that costs arising from events outside of the insured’s control, i.e. conference cancelled or postponed, will be met subject to policy usual terms and conditions.

For travel being booked to a country or an area in a country which is not subject to FCO advising against all travel to or all but essential travel to due to COVID-2019, and no selfimposed quarantine requirements are in place, normal policy terms and conditions apply.

Where travel is to a country or area in a country which is subject to FCO Returning Traveller advice to self-isolate, then the Insured and the Insured Person need to take this into consideration and self-insure this element. There is no cover for returning self-isolation where it is a known requirement at the time of booking the travel.

If an Insured Person contracts COVID-19 whilst on an insured journey, on return to their usual country of residence the local domestic health authority/NHS/health service will provide ongoing treatment in line with the global efforts to maintain and manage the spread of the virus.

www.gov.uk/guidance/coronavirus-covid-19-information-for-the-public

For travel being booked to a country or area in a country which the FCO advise:

against all but essential travel to certain countries or areas within a country due to COVID-2019 (FCO orange areas)
against all travel to certain countries or areas within a country due to COVID-2019 (FCO red areas)

We strongly recommend that insurers should be advised of these trips as they are material facts. Details of the planned travel and nature of the trip should be submitted to insurers for consideration by the underwriter, including the planned itinerary, and details of the risk assessment undertaken. There is, nevertheless, a real prospect that underwriters will insist to exclude Coronavirus related losses.

In respect of any trip booked before COVID-19 became a Public Health Matter of Concern on 30th January 2020, and where the FCO is currently either advising:

advised against all but essential travel to certain countries or areas within a country due to COVID-2019 (FCO orange areas)
advised against all travel to certain countries or areas within a country due to COVID-2019 (FCO red areas)

Many insurers have confirmed that Medical Expenses and Cancellation claims will be considered, subject to the journey being within scope of the insurance policy.

We recommend communication with Airline/Tour Operator as a first step to see what options are made available to first and/or recover any costs incurred. However, travel insurers may well exclude losses where there is an obligation on the airline or tour operator to provide a refund.

Cyber and Data Liability

Unfortunately, there are early warning signs showing that fraudsters are already trying to take advantage of the fact that many organisations are making changes to some of their processes and that key staff are not necessarily face-to-face. As a result, we are seeing an increase in highly sophisticated scam attempts that are using details like emails, messages and texts in a colleague’s name to validate and authenticate their bogus requests.

You should be on high alert and extra vigilant for these frauds and scams. Tips for avoiding scams that we would highlight include:

Check before you click on links or attachments. Question anything unusual and do not take any chances with offers to do things like ‘Upgrade to WhatsApp Gold’, which is an example of the increasing number of mobile-based scam attempts that are becoming more commonplace.

Watch out for unfamiliar websites. Malicious websites may appear legitimate and offer information on coronavirus, but be wary of any requests for user names, passwords or other sensitive information. Stick to the websites you know, and go directly to their URLs if possible.

Be suspicious of unexpected emails. Phishing emails will often create a false sense of urgency or fear, sometimes outright threatening you. Know that legitimate organisations won’t use these tactics. Check that the sender’s email address is exactly in the format of previous emails, and if telephoning to check an email’s veracity don’t simply rely on the phone number given in that email. If you receive anything from Gallagher we are always happy for you to contact us and verify its legitimacy particularly if it relates to payments. If it doesn’t feel right, it probably isn’t!

The majority of market Cyber and Data Liability policies will respond in the usual manner and we are aware of an increase in fraudulent activity. GDPR legislation remains in force and will still be applied albeit the ICO has indicated there may be some relaxation on imposition of certain aspects. Our advice is that you continue to practice good cyber security.

Conclusion

The impact of COVID-19 is hard to define and we appreciate that there will be many uncertainties and anxiety at this time. Please rest assured that Gallagher remains committed to supporting our clients with our services, through discussions with your insurers, by providing advice, and by sharing the experience we have gathered in recent weeks across our professional capabilities.