The insurance industry is feeling pressure from the global coronavirus pandemic. As business owners are forced to close their doors due to state-mandated “stay at home” orders, many business owners are unsure as to when or whether they will be able to reopen their doors.
As we recently explained in a previous blog, it remains unclear as to whether coronavirus-based closures will allow for business interruption insurance coverage to apply.
Last week, a bipartisan group of 18 members of the U.S. House of Representatives took steps to get insurance companies to expand business interruption coverage. The lawmakers sent a letter to four leading insurance industry trade organizations, urging insurers to provide business interruption coverage under existing commercial property policies for companies’ losses due to closures caused by coronavirus.
The lawmakers are asserting that the pandemic fulfills policy requirements that an interruption in business be attributable to a “direct physical loss,” or damage to property. Additionally, they stressed that “shelter-in-place” orders should trigger coverage for businesses’ losses under the “civil authority” prong that is also often found in commercial property policies.
In response to the lawmakers’ pleas, executives of the four insurance groups replied stating, “Business interruption policies do not, and were not designed to, provide coverage against communicable diseases such as COVID-19. The U.S. is in the midst of a national crisis that will require federal assistance that provides funding directly to those American individuals and businesses most in need. Our organizations stand ready to work with Congress on solutions that provide the necessary relief as soon as possible.”
State legislatures have now begun taking the initiative to offer small businesses help. Lawmakers in New Jersey are currently in talks with insurance carriers to potentially make changes to bill A3844 which would retroactively expand business interruption insurance to include losses resulting from coronavirus. While there are a lot of issues that will need resolving to push these changes through, it is a step in the right direction to help those in need during this pandemic.
Additionally, California is urging insurance carriers to grant a 60-day (or more) grace period to their policyholders before canceling their policy for failure to pay premiums.
As insurance attorneys, we understand the frustrations in dealing with insurance companies. It’s important to have an experienced team on your side who can navigate your claim. Our team of attorneys here are Fulmer Sill is ready to assist with your insurance disputes. Contact us today to begin your free case evaluation.