Analysis of LMA5397
About LMA5397
Drafted by the Lloyd’s Market Association (LMA) and released in April 2020, LMA5397 is a communicable disease exclusion for use on power generation, construction and engineering policies.
Clause 1: the ‘Communicable Disease’ exclusion
At its broadest, LMA5397 excludes loss ‘in connection with’:
- a Communicable Disease; or
- the fear or threat of a Communicable Disease.
Because all that is required between the loss and Communicable Disease is a ‘connection’, the Communicable Disease may not need to be a cause of loss for the exclusion to apply. The breadth of the exclusion is further demonstrated by the words ‘regardless of any other cause contributing concurrently or in any other sequence thereto’ in clause 1.
In clause 2 of LMA5397, ‘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.