Third-Party Insurance Coverage Issues in the COVID-19 World

By: Erik S. Mroz

While first-party business interruption claims are getting the big headlines right now, the COVID-19 world also presents some unique issues for third-party coverage and claims.   We expect an increase in COVID-19 claims affecting two common types of business coverage: Worker’s Compensation (“WC”) and Commercial General Liability (“CGL”).  It is worth noting at the outset that third-party claims are highly fact dependent and causation will be a tough hurdle.  Both insurers and their insureds need to fully understand the facts of the underlying liability case and the provisions contained in their policies before jumping to any coverage conclusions.

WC Coverage

Indiana’s WC system is largely governed by statute.  With few exceptions, every employer and every employee in Indiana must comply with the State WC system to “pay and accept compensation for personal injury or death by accident arising out of and in the course of the employment.”  Ind. Code § 22-3-2-2.  “The burden of proof is on the employee.”  Id.  Further, “The rights and remedies granted … on account of disablement or death by occupational disease arising out of and in the course of the employment shall exclude all other rights and remedies of such employee…”  Ind. Code § 22-3-7-6.

The application of the Indiana WC system to claims will be highly fact sensitive.  Ind. Code § 22-3-7-10 defines “occupational disease” as a “disease arising out of and in the course of the employment.”  However, “[o]rdinary diseases of life to which the general public is exposed outside of the employment shall not be compensable, except where such diseases follow as an incident of an occupational disease.”  Id.  Some commentators have noted that certain health care workers or other workers that can confirm workplace exposure to the virus may have valid WC claims.  Yet, the burden of proof is high and it is far too early to know how courts will respond. 

CGL Coverage

Most businesses in Indiana carry CGL insurance, which covers third-party claims for “bodily injury” and “property damage” caused by an “occurrence.”  The term “occurrence” is defined by the terms of the policy.  A typical CGL definition of “occurrence” is “an accident, including continuous or repeated exposure to substantially the same harmful conditions.”  Indiana courts have frequently addressed whether an event qualifies as an “occurrence” under identical or similar CGL language.  For example, in Auto-Owners Ins. Co. v. Harvey, 842 N.E.2d 1279, 1283-85 (Ind. 2006), the Indiana Supreme Court affirmed that “an accident means an unexpected happening without an intention or design.”

A likely scenario for a potential CGL claim is the situation in which a plaintiff alleges that the insured defendant acted negligently in failing to protect him/her from being exposed to the virus.  Another potential scenario involves exposure to family members of an infected employee.

Most CGL policies contain certain express exclusions that should be considered.  For example, most CGL policies exclude coverage for “occurrences” that are expected or intended from the standpoint of the insured.  Some CGL policies also include exclusions for claims arising from bacteriological exposure or communicable disease.  However, it is important that all policy provisions and exclusions be understood within the context of the policy as a whole.  Further, Indiana courts typically construe policy ambiguities in favor of coverage. 

For questions regarding insurance coverage or claims, please contact your DSV attorney or Erik S. Mroz at 317-580-4848 or

***The information contained on this website is for informational purposes and is not intended as formal legal advice and cannot be relied upon as such.  No attorney client relationship is established or intended as a result of the information contained on this website.***