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Business Interruption Insurance for Ebola – Managing Risk for Hospitals and Healthcare Providers

Written by:  Heidi Lawson and Scott Rader

William Gallagher Associates, a Boston-based insurance broker, has announced the rollout of a new policy to cover Ebola-related losses at hospitals and other healthcare providers involved in primary care emergency treatment.  Styled as Pandemic Disease Business Interruption Insurance and provided by the Ark Syndicate at Lloyd’s, this policy will provide insurance coverage to healthcare providers arising out of a “non-physical damage event” like a voluntary or mandatory quarantine of nurses and medical professionals.  Covered losses under the policy are contemplated to include the cost of paying for staff replacements and the reimbursement of lost revenues due to quarantines, and the cost of stockpiling additional supplies and vaccines on a daily basis.  The product is planned to be sold as a bespoke insurance policy tailored to a client’s individual needs, and will be written on a contract-by-contract basis without any standard set of exclusions.  With Ebola cases on the rise this insurance could help providers manage this costly risk by providing important business interruption protection.  Since this insurance coverage will be tailored to a client’s individual needs, special attention should be given to the policy wording and scope of coverage to make sure the coverage meets the expectations of the insured.  In addition, because this coverage is being underwritten by the Ark Syndicate at Lloyd’s, particular consideration should be given to choice of law and choice of venue clauses.  If you have any questions regarding this new insurance product, or regarding a legal review of other insurance coverages for hospitals and healthcare providers, please contact Scott Rader, Elizabeth Kurpis or Heidi Lawson.  Also, watch this space in the coming weeks and months to see if any other insurance carriers will be willing to offer similar business interruption coverage to providers (and even other businesses) that could be impacted by Ebola.

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Theresa advises clients on all aspects of the pharmaceutical supply chain, including counseling industry stakeholders on a range of business, legal, transactional, and compliance matters. She provides clients with strategic counseling and creative business modeling that considers legal restrictions and regulatory risk in light of innovation and business goals.