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Client Alert: Understanding Legal Defense Policies in a Time of COVID-19

by Gulfshore Insurance

Employee Benefits Understanding Legal Defense Policies in a Time of COVID 19The number one question every association wants to know is “do we have coverage for losses due to COVID-19?” This depends on your policies and the claims being brought forth. While the availability of insurance coverage for pandemic-related losses is still far from certain with most policies having explicit “virus” exclusions, it is important to understand alternative coverages that may provide an additional layer of protection. While this coverage has its strengths and limitations, Legal Defense insurance covers legal services as a result of a lawsuit where the insured is a defendant and coverage is not available under any of your in-force policies.

Coverage Highlights:

  • Provides legal defense when a lawsuit or claim is denied or excluded from coverage
  • No deductible
  • Fixed nominal premium

 

Who is usually covered under these policies?

  • The association
  • The officers and directors of the association
  • The manager and management company
  • Your employees

 

Coverage Exclusions & Limitations:

  • Requires reporting of ALL claims to carriers within a strict time period
  • Excludes certain fees such as deposition or transcript costs, court reporter fees, expert witness fees, surveillance charges, investigator fees, and more
  • Excludes claims prior to or after expiration of this policy
  • Excludes claims filed outside the state of Florida
  • Excludes claims filed in Criminal Court and lawsuits filed in Federal Court except service animal, emotional support animal, discrimination in housing or ADA
  • Does not provide any indemnification

 

The COVID-19 pandemic has presented an opportunity to review your risk management portfolio to ensure that you understand what coverages you have, the limitations of those coverages, and what coverages you do not have that you may want to consider to help prepare for a potential future crisis. Although these types of policies seem attractive and well-priced, they should be fully understood before considering the coverage. If you would like to learn more, please contact us.