Covid-19: An Act of God?
Insurance Perspective
Keywords:
Act of God, Covid-19, Pandemic Insurance, Insurance perils exclusionsAbstract
The Covid-19 pandemic came with a roar and attacked the globe, which resulted in national lockdowns to control the spread of this deadly virus. Such cross-border and domestic movement restrictions have impacted businesses significantly throughout the globe, leading to cancellation or postponement of various sports and entertainment events, including Tokyo Olympics 2021, which was scheduled for mid of 2020 and IPL 2021 suspension- due to deadly second wave in India. While one may have an impression of being safe under insurance cover on such business interruptions and event cancellations, but such claims are likely to face certain issues. Since most of the prevailing underwriters in the market did not issue many policies which covers the loss due to direct impact of a pandemic, simply because if all the insurances were to cover such losses, then insurers do not have enough resources or the amount of claims they’ll be exposed to will be astronomical and abnormally large for any insurance company to account for. But, if the perils do not exclude such instances, then the principle of ‘contra proferentum’ [1] will come to shine the claimant’s armor.References
Contra preferentum’ is a principle followed by courts which states that in case of ambiguity. the interpretation against the party who drafted the contract i.e., the party who is in the best position to avoid harm, will be preferred. Thus, in insurance matters, where there appears to be any ambiguity in understanding the terms of the policy, the interpretation which favors the insured/ claimant will be preferred.
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