As public health officials warned of the emergent spread of COVID-19, institutions of higher learning have been taking unprecedented steps to protect the health of students and faculty. Many universities have transitioned to remote learning and, to the extent possible, have closed their physical campuses, including student housing.
Universities are considering whether they are legally liable to compensate students for the closure of housing and other campus facilities, which students expected to use for an entire semester or academic year. Does insurance cover that?
Commercial general liability considerations
Commercial general liability insurance covers businesses and universities for their liabilities to third parties that arise because of bodily injury, property damage and advertising liability, as well as for “personal injury,” which is an umbrella term for a wide range of rights. Any number of those coverages could be relevant when a university faces liabilities to third parties arising out of the COVID-19 outbreak.
Typical general liability policies offer two distinct categories of coverage. “Coverage A” is for bodily injury or property damage caused by an accident. “Coverage B” is for certain specific advertising and personal injury offenses, such as false arrest; malicious prosecution; defamation; publication of material that violates a person’s right of privacy; infringement of certain intellectual property rights; and perhaps most important for our purposes, “wrongful entry into, or eviction of a person from, a room, dwelling or premises a person occupies.”
A university’s chances for insurance recovery will depend heavily on the wording of the policy, and the goodwill of a university’s insurance partner.
A university’s closure of student housing, compelling students to leave premises they had a right to occupy, is a scenario that fits comfortably into the language “wrongful entry into, or eviction of a person from, a room, dwelling or premises a person occupies.”
While a university might contest whether the closure was wrongful, demands for compensation due to dorm closures should be covered as damages for the university’s liability for the eviction of students from their rooms. Additionally, claims arising from a loss of access to other types of facilities—athletic, recreational or parking facilities, for example—could also be covered because they are premises the students may have had a right to occupy.
Some insurance companies might push back, asserting limitations, exclusions or other restrictions on coverage. Most notably, many insurance policies contain an exclusion for claims arising from a virus or communicable disease. Insurance companies may assert that coverage for student housing claims could be denied under such an exclusion because, broadly viewed, such claims arise out of the coronavirus.
Review policy language
There are a couple of things to consider in response. A virus exclusion may be applicable, by its terms, only to Coverage A and not to Coverage B. In that event, the exclusion would not apply to the wrongful eviction coverage. Furthermore, exclusions can be broadly framed or may be more narrowly targeted in a way that would exclude bodily injury directly caused by a virus, but not housing claims that were caused by dormitory closures resulting from a global pandemic.
Of course, if a university’s insurance policy contains no virus or communicable disease exclusion, when such exclusions are widely available in the insurance marketplace, the absence of the exclusion may provide strength to any argument that losses caused by viruses or communicable diseases are intended to be covered.
Every insurance policy is different. While there is much general insurance advice and commentary being generated in response to the COVID-19 crisis, and this article may just add to the din, most coverage disputes turn on specific policy language.
As with other crises, a university’s chances for insurance recovery will depend heavily on the wording of the policy, and the goodwill of a university’s insurance partner.
Timothy P. Law is a partner and Elizabeth Vieyra is an associate in the insurance recovery practice group at Reed Smith LLP.
UB’s coronavirus page offers complete coverage of the impacts on higher ed.