COVID-19 Insurance Coverage & Enforceability of Liability Waivers


With much of Ontario continuing to remain open in what appears to be a second wave of the COVID-19 pandemic, many business owners are turning to their insurance policies to cover losses and review whether potential future claims arising from the transmission of the virus will be covered by its insurer. At the same time, business owners have also been considering their mitigation strategies to protect both their business and their employees from liability arising from the transmission of the virus. One common mitigation strategy at the forefront is the use of waivers of liability. Interestingly, some jurisdictions have also passed emergency legislation which seeks to protect organizations and persons acting in good faith from COVID-19 lawsuits. On June 17, 2020, the Government of Ontario indicated its intention to consider enacting legislation to this effect.

This article discusses insurance coverage generally and considers the practical enforceability of waivers of liability for the transmission of infectious diseases. In addition, this article recommends criteria to incorporate in these liability waivers and the use of same to limit the risk of liability. Lastly, this article briefly discusses good faith immunity from COVID-19 as was being considered by the Government of Ontario earlier this summer.

Insurance Coverage for Infectious Diseases

As a result of past epidemics, many insurance policies are written to specifically exclude losses suffered due to infectious diseases. Typically, whether there is coverage under a policy will depend on whether the loss suffered is a loss caused by a peril not otherwise excluded by its insurance policy.

While it remains unclear whether COVID-19 transmission would qualify as a direct physical loss or damage to an insured’s property, insurers may wish to review their policies to clarify whether their common exclusion clauses provide coverage for the transmission of infectious diseases. Some policies contain specific exclusions with respect to pathogens, whereas others speak to pollutants or molds. Presently, many insurers have begun inserting specific COVID-19 exclusion clauses to make it clear that the transmission of the infectious disease is excluded. Insurers should scrutinize these exclusions to ensure that the language is clear and concise.

Whether coverage is provided to the insured will be determined by many factors, some of which are as follows:

  • is the insurance policy an “all-risk” policy;
  • can “contamination” be considered a physical loss to the insureds’ property;
  • is the direct cause of the loss in question COVID-19;
  • does the insurance policy contain common exclusions for epidemic;
  • if so, does the exclusion clause apply to the circumstances; and
  • would any other common exclusions, such as those for pollutants or pathogens, if any, apply.

Where coverage is found to exist with respect to the transmission of infectious diseases, insurers may wish to speak to their insured to determine whether appropriate mitigation strategies are in place to limit their exposure to liability during the pandemic. Differing insureds will have differing exposures, and as a result, likely different mitigation strategies. However, one tool that may be considered is the use of a liability waiver as discussed below.

Practical Enforceability of Liability Waivers for Infectious Diseases

Waivers of liability are agreements between the business, which provides goods or services, and its consumers. In executing a waiver of liability, a consumer agrees not to hold the business liable for injuries sustained as a result of the goods or services, including any injuries sustained as a result of a business’ negligence. In other words, a consumer is forfeiting their right to commence a claim against the business.

While it is not yet possible to predict how the Ontario courts will interpret and enforce waivers of liability specific to infectious diseases, insurance companies whose policies allow for coverage for the transmission of infectious diseases may wish to ensure that its insureds have waivers of liability with the above-referenced requirements to limit the exposure to liability. However, we do recommend, even where the requirements are all met, that both insurance companies and their insureds consider the use of waivers of liability as only one mitigation tool and do not solely rely on same.

Generally speaking, Ontario courts consider the following criteria when determining the enforceability of a waiver of liability:

  • Whether the waiver is clearly written, including whether the language used is clear, unambiguous and easily understood to the average reader;
  • Whether the waiver expressly informs the consumer that they are forfeiting their right to commence a claim against the business;
  • Whether the waiver clearly excludes liability for injuries caused by negligence, and whether the scope identifies the specific circumstances;
  • Whether the consumers’ attention was directed to the clause protecting the organization from liability, including negligence;
  • Whether the consumers’ attention was brought to the clause protecting the business from liability, including negligence, before accepting the goods or services; and
  • Whether the consumers chose to accept the terms of the waiver, having understood the scope and effect of the waiver of liability, on a voluntary basis without duress or undue influence.

Thus, when providing the waiver of liability to consumers, insureds should be sure to provide its consumers with the waiver of liability prior to delivering the goods or services, specifically draw its consumers’ attention to the clause pertaining to forfeiting their right to sue, ensure that the contents of the waiver of liability are clear that the insured business and its employees are not liable for the transmission of infectious diseases, such as COVID-19, and specifically advise the consumer that the insured business and its employees will not be liable for any injury or illness, including the transmission of infectious diseases such as COVID-19, caused by negligence. The insured’s employees should allow its consumers time to read over the waiver of liability in full and answer any questions that they may have regarding same.

In terms of the waiver of liability itself, insureds may wish to consider practical tools which bring the scope and importance of the waiver to consumers’ attention, such as separating the waiver of liability apart from other written agreements, bolding, increasing font size, underlining, altering formatting, or adding specific colours that draw attention, and if provided online, ensuring that its consumers are required to click to agree and provide an electronic signature that they have read and understood the waiver.

Legislating Good Faith Immunity from COVID-19 Claims

Several jurisdictions in the United States of America have already passed emergency orders granting protection to its health care workers and facilities from COVID-19 lawsuits for good faith efforts. In April, the Government of British Columbia followed suit and passed a very broad Ministerial Order which provides protection for any organization or person providing an essential service from liability for damages resulting from exposure to or the spread of COVID-19 infections. The list of essential service providers who were granted immunity includes:

  • health care workers;
  • law enforcement personnel and first responders;
  • vulnerable population service providers;
  • critical infrastructure service providers;
  • food and agriculture service providers;
  • transportation, infrastructure and manufacturing services;
  • sanitation services;
  • communications, information sharing and information technology providers; and
  • non-essential service provides.

On June 10, 2020, a further Ministerial Order came into force in British Columbia which granted sporting organizations immunity to COVID-19 lawsuits as well. However, it is important to note that immunity will not be provided to those who are found liable for gross negligence or for failing to follow public health guidelines.

On June 17, 2020, the Government of Ontario indicated it would consider enacting protections from lawsuits for organizations and people who spread COVID-19 while acting in good faith. The purpose of this legislation would be to prevent lawsuits against organizations and people who unwittingly infect others as the province continues to allow more non-essential businesses to open. Similarly to British Columbia, Premier Doug Ford clarified that he is “not supporting bad actors” and that those persons will be held accountable. However, it remains to be seen how this may affect lawsuits that were already commenced in Ontario. As of early June, there were at least nineteen proposed class actions across Canada relating to the pandemic.

There has been extensive debate surrounding whether the Government of Ontario should in fact grant civil immunity. Some argue that companies and persons acting in good faith, with reasonable procedures, should not have to spend resources and several years litigating these lawsuits. However, others are of the view that organizations and persons should be held accountable and responsible for their negligent practices.

Presently, it appears that the topic of legislating good faith immunity has not been further discussed by the Government of Ontario since earlier this summer. As such, it remains to be seen whether the Government of Ontario will in fact join the other jurisdictions in enacting this legislation. It would be prudent for insurers to monitor any such developments in the coming months.

Key Take-Aways:

Be prepared. Insurance companies should review its policies to determine whether its common exclusions void its insureds’ coverage. If its common exclusions do not void the insureds’ coverage, the insurer may wish encourage its insureds to implement waivers of liability to its mitigation practices, and to suggest that its insureds have its consumers sign a waiver of liability prior to receiving the goods or services it offers. However, we strongly recommend that the insureds seek legal advice when considering implementing a waiver of liability to increase the likelihood of enforceability of same to minimize their exposure to liability.

Be prudent. It remains to be seen how the courts will interpret and enforce liability waivers of infectious diseases. As such, it would be prudent for both insurance companies and its insureds to view waivers of liability as only one tool in their collective mitigation strategies and continue to take all additional precautions rather than rely solely on waivers. For instance, insureds should continue to follow best practices as recommended by health officials, such as social distancing, wearing masks, and cleaning on a regular basis.

Be mindful. Should the Government of Ontario follow this trend and provide immunity from COVID-19 lawsuits, the implications will surely be widespread and felt by insurance companies, businesses, employees and employers, and consumers alike.

For further assistance, please contact a member of Kelly Santini’s insurance group.

Sarah Reich