Contractual Distancing: To What Extent are Pandemics Covered in Insurance Policies?

A pandemic is a disease that spreads over a wide geographic area across international boundaries and affects an exceptionally high portion of the population. Typically, a pandemic emerges without warning, with the population having no or limited natural immunity against it. A pandemic spreads fast, and there is no vaccine or cure available against it, at its start.

The novel Coronavirus (COVID-19) is a pandemic that emerged in December 2019 in Wuhan, China and has rapidly spread across the world, affecting populations the world over. As at the time of writing this alert some four (4) months since the first COVID-19 case was recorded, the total number of infections across the globe stands at over three million one hundred and fifty thousand (3,150,000) with approximately two hundred and eighteen thousand (218,000) deaths – staggering numbers. The pandemic has also had a deleterious effect on world economies, with many governments having imposed country-wide lockdowns and quarantines in a bid to contain the spread of the disease, thereby bringing a countless number of businesses to a halt.

Insurance business boils down to a hedge against unforeseeable loss caused by specified risks, with the insurance company paying the policyholder in the event of the risk and loss occurring. As a business model insurance works when the risk is relatively small and spread across a large number of policyholders. The actuarial science behind the pricing of insurance policies dictates that the losses must be contained to a relatively small number of policyholders, failing which the model becomes unsustainable. Therefore, when losses are widespread and claims literally “fly off” the actuarial charts – insurers are likely to tighten up, claims are likely to be rejected, and disputes are likely to arise between insurers and policyholders over the cover.

In this alert we consider the extent to which pandemics such as COVID-19 are covered in insurance policies. The policies considered are health, life, business and employer’s liability.


Health Insurance

In most health insurance policies, pandemics and epidemics are expressly excluded from coverage. As cover under an insurance policy only extends to those risks that have been specified in the policy, an express exclusion means that a policyholder cannot bring a claim when they suffer from a disease that has been declared a pandemic or epidemic. There are also common exclusions in health insurance policies by which “chronic” diseases are excluded from cover, where chronic is described to include a disease for which there is no known cure, (such as COVID-19).

The rationale behind the express exclusion of pandemic or epidemic diseases is that the cost of treatment would be too high for most insurers to bear due to the large number of people affected.

Nonetheless, it is important to consider the specific wording of the policy to determine if indeed pandemics are excluded from coverage either expressly, or because they might fit into the definition of a chronic disease, which might be excluded.


Life Insurance

As is self-evident in the name, the risk covered under life insurance policies is death, and thus the consideration in life insurance policies is whether deaths resulting from COVID-19 complications would be covered under.

Life insurance policies usually include exclusions to the effect that an insurer will not pay out a claim where the insured party dies by suicide, specified diseases, or while engaging in dangerous acts specified under the policy. Therefore, subject to the specific wording of the policy, if the insured dies due to a pandemic, the insurer would be required to pay out the claim, unless the policy excludes the same.


Business Insurance

Given the uncertainties that come with conducting any type of business, business owners usually take out insurance to cover certain perils that the business may be exposed to. Some businesses take out “all-risk” or “umbrella” policies to cover a number of risks in one policy. For example, one policy can cover the immovable and movable property of the business, business interruption, legal liability, loss of money, loss of documents and employer’s liability.

Again, whether such a cover would include losses that the business would incur in case of a pandemic depends on the specific wording of the policy. Generally, such covers exclude claims arising from the actions of the government. Therefore, it is arguable that losses arising due to government ordered quarantine, lockdown or curfews in containing COVID-19 would not be covered. In any case, if the insured claims that a pandemic is covered in the policy, it would be upon them to prove this, in consonance with the principle that he who alleges must prove. Apart from this legal principle, some insurance policies specifically provide similarly worded clauses so as to specify the burden to be borne in case of a dispute.

Some businesses opt to take out different policies covering different perils. For example, a business could have a fire policy, employer’s liability insurance, and insurance covering damage to its merchandise. The specific wording of each policy would have to be read carefully to determine whether it provides coverage for losses incurred during a pandemic.

Some insurance policies in this category tend to exclude consequential loss, which is incurred due to the insured’s inability to use the business property or equipment. This can be the case due to government-imposed curfews and shutdowns in an effort to control the spread of a pandemic. Where consequential loss is involved, it is important to consider the specific wording of the policy to determine if it covers the losses incurred.

It is also a curious question as to whether the doctrines of force majeure and frustration which might be invoked to avoid liability under contracts if the circumstances allow, would be applicable to insurance policies, particularly in scenarios where the circumstances giving rise to the force majeure and frustration for example, business disruption due to a pandemic such as COVID-19, comprise the very risk or peril insured against.


Employer’s Work Liability Insurance

The Work Injury Benefits Act, 2007 requires employers to take out and maintain an insurance policy to cover their employees for work related injuries or diseases “arising out of or in the course of employment”. The cover is intended to cover both diseases specified under the Second Schedule of the Act, and other non-specified diseases, provided that they arise out of or in the course of employment. As pandemics are not excluded, employees who contract COVID-19 in the course of employment would be covered. The challenge however would be in proving that the disease was in fact contracted whilst “in the course of employment”. This would be especially difficult to prove, given the widespread nature of the pandemic.



The extent to which an insurance policy covers pandemics would ultimately depend on the exact wording in the insurance policy. Specific advice from counsel would thus be recommended and most appropriate in considering the extent of the cover. It also ought to be borne in mind that unless otherwise specified, the burden of proof as to whether a pandemic is covered under an insurance policy is ordinarily borne by the policyholder.

This alert is for informational purposes only and should not be taken as or construed to be legal advice. If you have any queries or need clarifications, please do not hesitate to contact John Mbaluto ( or your usual contact at our firm, for legal advice relating to the COVID-19 pandemic and how the same might affect you.