JC2020-011 and JC2020-012 Communicable Disease Exclusions

July 26, 2020 by Stephen Tomlinson

Analysis of JC2020-011 and JC2020-012

About JC2020-011 and JC2020-012

Released in April 2020 by the Joint Cargo Committee (JCC), JC2020-011 and JC2020-012 are Communicable Disease Exclusions that have been drafted for Marine Cargo policies.

Clause 1: the Communicable Disease Exclusion

Broadly, clause 1 of JC2020-011 and JC2020-012 exclude loss, damage or liability that has a connection with:

a ‘Communicable Disease’; or
the fear or threat of a ‘Communicable Disease’.

Causation not required for exclusion to apply; connection only

For the exclusion in Clause 1, the words ’caused by’, ‘contributed to by’, ‘resulting from’, ‘arising out of’ and ‘in connection with’ are used. Of these, ‘in connection with’ is the broadest since it may not require a causal relationship between the Communicable Disease and the loss, damage or liability for the exclusion to apply.

Clause 1 of JC2020-011 and JC2020-012 also states that the exclusion shall apply ‘regardless of any other cause or event contributing concurrently or in any other sequence thereto’. Even if a circumstance other than Communicable Disease was proximate cause of the loss, damage or liability, the exclusion will apply if there is a ‘connection’ with Communicable Disease.

JC2020-012: sub-limited exception

Unlike JC2020-011, JC2020-012 has an exception whereby the exclusion of Clause 1 does not apply to ‘charges that would otherwise be recoverable this insurance… to complete a marine transit insured hereunder’. Cover for these charges is to be subject to sub-limits that are specified in JC2020-012. As such, separate sub-limits can be specified for:

each and every loss, or series of losses, arising out of one event; and,
an annual aggregate.

If sub-limits for such charges are specified elsewhere in the underlying policy, then no sub-limits need to be entered in JC2020-012. In such cases, it would be preferable if the sub-limits provision in JC2020-012 was deleted.

Clause 2: definition of ‘Communicable Disease’

In JC2020-011 and JC2020-012, ‘Communicable Disease’ is defined as ‘any disease which can be transmitted… from any organism to another organism’. Requiring the disease to be transmissible between organisms does qualify the scope of the definition; food poisoning, for example, would not be excluded because it is transmitted by the ingestion of contaminated food or water, not by a pathogen that is transmitted between organisms.

Beyond this,

sub-clause 2.1 inclusively identifies types of pathogens;
sub-clause 2.2 inclusively identifies means of transmission; and,
sub-clause 2.3 identifies forms of disease (i.e. bodily injury, illness, damage to human health, human welfare or property).

None of these sub-clauses, however, are essential to the operation of the endorsement.

JR2020-016 Communicable Disease Endorsement

July 26, 2020 by Stephen Tomlinson

JR2020-016 Analysis

About JR2020-016

Drafted by the Joint Rig Committee and released in April 2020, the JRC Communicable Disease Endorsement JR2020-016 is intended to be applied to energy policies.

Clause 1: the Communicable Disease Exclusion

Broadly, Clause 1 of JR2020-016 excludes loss, damage or liability that is caused by:

a ‘Communicable Disease’; or
the fear or threat of a ‘Communicable Disease’.

JR2020-016 preferred to LMA exclusions

Because JR2020-016 requires the Communicable Disease to be the proximate cause of loss for the exclusion to apply, JR2020-016 should be preferred by insureds to some of the LMA Communicable Disease exclusions which only require the loss or damage to have ‘a connection with’, to ‘arise out of’ or to occur ‘concurrently’ with a Communicable Disease.

Clause 2: clarification

Clause 2 of JR2020-016 clarifies that the exclusion in Clause 1 excludes costs to clean-up, detoxify, remove, monitor or test for a Communicable Disease or property insured that is affected by such Communicable Disease. While this may seem straightforward, there is a distinction between:

a pathogen which causes a disease; and,
a disease, which is a condition that affects an organism.

Strictly speaking, it would not be possible to ‘clean-up’ or ‘detoxify’ a disease. Furthermore, to ‘remove’ a disease would require the organism to be physically removed from a location. However, ‘monitoring’ or ‘testing’ for a disease is feasible, since this would simply require testing persons (or other organisms) to determine if they have the disease.

For consistency with clause 1, it would be preferable if clause 2 also referred to the ‘fear or threat (whether actual or perceived) of a Communicable Disease’. Given the breadth of clause 1, however, such an amendment does not appear strictly necessary.

Clause 3: Definition of Communicable Disease

In JR2020-016, ‘Communicable Disease’ is defined as ‘any disease which can be transmitted… from any organism to another organism’. Requiring the disease to be transmissible between organisms does qualify the scope of the definition; food poisoning, for example, would not be excluded because it is transmitted by the ingestion of contaminated food or water, not between organisms .

Beyond this,

sub-clause 3.1 inclusively identifies types of pathogens; and,
sub-clause 3.2 inclusively identifies means of transmission.

Neither sub-clause is essential to the operation of the endorsement.

Clause 4: ‘primacy’ clause

Clause 4 of JR2020-016 is a primacy clause which states that the endorsement shall apply to extensions, additional coverages, exceptions and other coverage grants.

LMA5399: Communicable Disease Exclusion (Casualty Treaty Reinsurance)

July 25, 2020 by Stephen Tomlinson

Analysis of LMA5399

About LMA5399

Drafted by the Lloyd’s Market Association (LMA) and released in May 2020, LMA5399 is a communicable disease exclusion for Casualty (Liability) Treaty Reinsurance.

Clause 1: LMA5399 exclusion

At its broadest, Clause 1 of LMA5399 excludes loss and liability ‘in connection with’:

a Communicable Disease; or
the fear or threat, whether actual or perceived, of a Communicable Disease.

Because all that is required between the loss/liability and Communicable Disease is a ‘connection’, the Communicable Disease may not have to be a cause of loss for the exclusion to apply. This intended effect of the exclusion is demonstrated by the words ‘regardless of any other cause contributing concurrently or in any sequence’ in clause 1.

Clause 2: definition of ‘Communicable Disease’

In clause 2 of LMA5399, ‘Communicable Disease’ is defined as ‘any disease which can be transmitted… from any organism to another organism’. Requiring the disease to be transmissible between organisms does qualify the scope of the definition; food poisoning, for example, would not be excluded as a ‘Communicable Disease’ because it is transmitted by the ingestion of contaminated food or water, not by a pathogen that is transmitted between organisms.

Beyond this,

sub-clause 2.1 inclusively identifies types of pathogens;
sub-clause 2.2 inclusively identifies means of transmission; and,
sub-clause 2.3 identifies possible effects of the disease or pathogen.

None of these sub-clauses, however, are essential to the operation of the endorsement.