Protections against COVID-19-related lawsuits remain a big piece of the debate over how Congress and state legislatures should respond to the ongoing pandemic.  But there’s been an odd omission from the debate.  No one seems to be asking who will pay for COVID 19 liability in the event that lawsuits are permitted to go forward.  Proponents of immunity legislation assume that main street businesses will foot the bill for lawsuits.  But our new research suggests that the vast majority of standard liability insurance policies in America cover COVID liability.  COVID immunity legislation is really a bid to shelter big insurance companies, not mom-and-pop businesses.  Moreover, such proposals -- including the latest last week from the House Problem Solvers Caucus -- overlook the many virtues that insurer liability coverage offers as compared to blunderbuss immunity provisions. 

An important starting point is to observe just how difficult winning COVID-19 liability cases will be.  Plaintiffs will need to show that defendants owed them a duty of care and to prove that such defendants behaved negligently around some COVID-19 risk.  Defendants who follow the prevailing norms of their industry or field will be able to offer that fact as a consideration in their favor.  Even where a plaintiff can successfully show negligence, the plaintiff will still need to prove that it is more likely than not that absent the defendant’s negligence the plaintiff would not have gotten sick.  And last, as a practical matter, a plaintiff will need to be able to prove damages sufficient to make a lawsuit worthwhile.  Only the sickest COVID-19 patients or their estates will satisfy this last criterion, and few plaintiffs will be able to make all these showings.  

To be sure, institutions such as universities, places of employment, prisons, or other sites in which people spend large portions of their time may be identifiable as sources of infection and may face some liability risk.  Even here, however, many states already offer a variety of immunity protections to such institutions.  Employers in some states will be able to hide behind workers’ compensation laws that immunize them from further liability in tort.  Some universities and virtually all prisons will enjoy protections arising out of complex sovereign immunity doctrines.  Nonetheless, there will very likely be some liability suits that chart a course through the obstacle course of existing tort law to create liability risks for institutions and businesses.  How should we respond to such a risk?

Proponents of immunity legislation insist that slashing liability is a prerequisite to starting up businesses that will be cowed into inaction in the face of lawsuit risk.  Fear of huge liability judgments, they contend, will stop the economy in its tracks.  Yet as time passes, a puzzle has begun to emerge.  Congress has not delivered immunity.  But businesses seem to have started up again, liability risks notwithstanding.  Why?

Our research supplies the reason: liability insurance. Using the insurance policy database of the Covid Coverage Litigation Tracker at Penn Carey Law School, we find that nearly all liability insurance policies include liability coverage for losses from infection by viruses. Of the 100 liability policies we have analyzed, only 20 had any such exclusion.  In property damage and business interruption policies, virus exclusions have become widespread since the SARS epidemic. But in liability policies, insurers have not adopted such exclusions for risks arising from a global pandemic.

Moreover, it is highly unlikely that more common endorsements, such as pollution exclusions, and fungi or bacteria exclusions will be construed to exclude coverage for COVID liability. A typical pollution exclusion excludes bodily injury  “arising out of the actual, alleged, or threatened discharge dispersal seepage, migration, release, or escape of pollutants.”  Some states have held that such pollution exclusion clauses may exclude liability coverage for virus leaks, but it is unlikely that a naturally occurring virus transmitted by humans will be considered a pollutant. 

Insurers, in short, have almost all opted to offer liability coverage for virus-related losses.  And such coverage offers two great advantages over immunity legislation.  For one thing, it allows mom-and-pop businesses to manage their risks without leaving victims of negligent conduct out in the cold.  At the same time, insurer liability coverage creates powerful incentives for insurers to develop and disseminate best practices for safety in the businesses they insure.  For a century and a half, insurers have delivered safety improvements to the American economy.  They can do so in the COVID-19 crisis, too, unless by immunizing employers we eliminate the market in liability coverage. The House Problem Solvers Caucus proposes linking immunity to new regulations by the Occupational Safety and Health Administration, or OSHA. But such regulations would be highly contentious and subject to capture by the very industries they purport to regulate. Tort liability backed by liability insurance coverage, by contrast, positions insurers to take the role of the regulators -- or to pay up. Either would be superior to immunity and corrupt regulations. 

In summary, our findings are that liability insurance is widespread and offers meaningful coverage to small businesses. In the short run, the real winners in immunity legislation proposals would not be Main Street firms but Wall Street insurers, whose gains would come at expense of people with negligently inflicted COVID-19 injuries.

Josh Czaczkes is a junior at Yale College; Tom Baker teaches at University of Pennsylvania Carey Law School; John Fabian Witt teaches at Yale Law School.  You can reach him by e-mail at john.witt at yale.edu.