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.