Does an insurance contract cover pandemic risks? | In Principle

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Does an insurance contract cover pandemic risks?

The COVID-19 pandemic affects the situation of companies and individuals. Many of them wonder whether they will be able to take advantage of insurance cover they have taken out. The insurance industry is wondering the same thing.

What does the insurance contract provide for?

First we should look at the provisions of the insurance contract. Disputes regarding insurance contracts, in particular during and shortly after the COVID-19 pandemic, may result from differing interpretations of the contractual provisions regarding the extent of the insurer’s liability. In this context, the provisions of the contract may prove relevant with regard to:

  • Force majeure insurance, which includes claims where the loss arose due to an event beyond the control of the insured (due to force majeure)
  • Business income insurance or business interruption insurance, which secures the achievement of the planned financial result in the event of an interruption or disruption of business activity as a result of the loss
  • Performance of contract bonds, which are the insurer’s obligation to pay the beneficiary (up to the amount of the sum guaranteed) if the third party fails to fulfil the obligation covered by the guarantee.

If an insurance contract contains at least one of the above clauses, it may give rise to claims against the insurer under the contract, which in turn will affect the insurer–reinsurer relationship.

Does the contract contain a clause excluding the insurer’s liability?

However, we should remember that some insurance contracts also contain clauses excluding or limiting the insurer’s liability. Particularly after the SARS epidemic, many contracts provide for exemptions for loss resulting from epidemics of contagious diseases announced by the government. Therefore, losses caused directly or indirectly by these events may be excluded from insurance coverage.

When a contract contains such exclusions, the risk that a claim will be made against the insurer decreases significantly, but this does not reduce the risk that a claim will be made against the insured. An example might be claims against an event agency to reimburse the cost of tickets, when due to a clause excluding the liability of the insurer it cannot claim compensation from its insurer.

Pursuit of claims and insurance disputes during the pandemic

During the pandemic, the number of claims is likely to decrease, if only because of the difficulty in effective and quick pursuit of recovery. In the case of existing claims, the time taken to process a claim in court proceedings is likely to be extended due to inevitable delays resulting from restrictions on movement and difficulties in the courts’ work. On the other hand, the claim settlement process itself may be a bit faster if insurers decide to carry out claim settlements only on a remote basis and that is allowed by the nature of the claims.

The Polish Insurance Association has developed recommendations to help protect insureds (business and individual clients) in a difficult financial situation as a result of the pandemic. Despite this, to alleviate financial difficulties and increase cash flow in the short term, insureds may seek to resolve disputes by concluding settlements.


We expect an increase in the number of insurance disputes, including claims against insurers in the immediate aftermath of the pandemic or lifting of restrictions on movement and operation of the courts.

To a large extent, these disputes may require determination of the intent of the parties to the insurance contract, i.e. whether their true intention was to exclude or cover risks related to the pandemic. This will apply to interpretation of clauses excluding the liability of the insurer as well as general insurance conditions.

Dr Marta Kozłowska, attorney-at-law, Monika Hartung, attorney-at-law, Dispute Resolution & Arbitration practice, Wardyński & Partners