And while no court has yet addressed coverage specifically for SARS, the report noted, several courts have ruled in the past that no coverage exists under CGL policies for viruses or bacteria such as Legionnaires disease and E. Coli, since they constitute pollutants and are excluded by the standard Insurance Services Office pollution exclusion.

Still, Aon argued that EIL policies may offer coverage for SARS cleanup, but it largely depends on the specific policy language and how it defines a pollution condition, since ISO has not developed an environmental liability policy.

An EIL policy written by New York-based American International Group Inc., as described in the study, says “pollution conditions means the discharge, dispersal, release or escape of any solid, liquid, gaseous or thermal irritant or contaminant.” The study then goes on to argue that SARS and other viral illnesses could “arguably meet” this definition of pollution condition.

Aon pointed out that the analysis of coverage gets complicated by mold-related exclusions or endorsements.

Almost all EIL policies issued nowadays, the study said, contain exclusions for mold or “microbial matter” unless that coverage is specifically selected by buying a microbial matter coverage endorsement. Under such endorsements, there is a better chance that SARS cleanup costs could be covered, although it still depends on the individual policy language.

Some EIL policies specifically do include viruses in their definition of microbial matter, Aon noted. In AIGs definition, for example, “microbial matter means fungi or bacterial matter which reproduces through the release of spores or splitting of cells, including but not limited to, mold, mildew and viruses, whether or not such microbial matter is living.”

The study also pointed out that for some multi-year EIL policies put in place before the onslaught of mold claims, there is a lack of a mold exclusion or an endorsement granting mold coverage. In most of these cases, environmental carriers cover claims arising out of mold on their EIL policies when they are “silent” as to mold. “These policies that are silent as to mold should treat SARS and other viruses the same as they treat mold,” Aon argued.

The study suggested that carriers would be hard pressed now to reverse direction and assert that viruses do not meet the definition of pollutant conditions and deny claims for SARS and other viruses after previously accepting coverage for mold claims.

However, EIL policies are not as common as commercial general liability and commercial property policies, according to Don Griffin, assistant vice president of business and personal lines at Des Plaines, Ill.-based National Association of Independent Insurers.

“EIL policies are usually written for large commercial risks. Your normal office buildings or condo buildings may not have that kind of coverage. This is a fairly specialized product–very few businesses have this,” said Mr. Griffin.

He also stated that it would be quite a stretch to say that viruses meet the definition of pollutant conditions.

“What Aon is saying is that if forms are silent on mold and if these carriers cover claims arising out of mold, they should cover SARS also,” he said. “I dont know if I would make that leap of faith. If thats something Aon wants to say, thats fine. But I am not going to say that,” Mr. Griffin emphasized.

“It gets down to an area that is new and unique. And as to whether the coverage exists or not, that depends on policy forms and interpretations by coverage attorneys or between companies and policyholders,” he added.

Further commenting on the Aon study, he said another relevant debate would be determining whether buildings and facilities are actually contaminated by the SARS virus.

“EIL policies may or may not cover that type of SARS exposure–it really depends on particular policies and how they are worded, because these are unique policies,” he said.

“It is going to be determined based on an actual reading of the policy form and a decision after a conversation with a company as to whether that would be covered or not,” Mr. Griffin said.

“What Aon is referring to is not a standard industry policy,” he said, noting that the policy from AIG is just one unique form.

Robert Hartwig, senior vice president and chief economist at the Insurance Information Institute in New York, was even more skeptical of the Aon study.

“SARS is one of an incalculable number of communicable diseases that are transmitted between individuals. And it has simply not been the case historically that bacteria or viruses that are transmitted between humans be compensable under EIL policies,” he said.

“Just because SARS has garnered international attention, that doesnt mean that this is somehow special and should suddenly become eligible under EIL claims,” he contended.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, May 26, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.