In response to the likelihood that policyholders’ will not be entitled to coverage for business interruptions due to COVID-19, lawmakers from several states have taken it upon themselves to propose bills which would re-write policies and create coverage where there is none.  Currently, six states — Pennsylvania, New Jersey, Ohio, Massachusetts, New York, and Louisiana— have proposed legislation that would require insurers of certain businesses to retroactively provide business interruption coverage for COVID-19 losses, even where the policies contain a virus exclusion.

Now the federal government has joined in with its own proposed legislation – H.R. Bill – The Business Interruption Insurance Coverage Act.  The legislation would make insurance coverage available for business interruption losses “due to viral pandemics, forced closures of businesses, mandatory evacuations, and public safety power shut-offs.”  More importantly, it would void existing exclusions and require carriers to provide coverage for business interruption losses relating to viral pandemics.

The proposed legislation has been met with fierce opposition from the insurance industry, which argues that such a step would obliterate the market for business interruption coverage and unconstitutionally undermine the contractual bargain.  

While the proposed legislations are circulating, the number of lawsuits that are filed continue to grow with no end in sight in the near future.