COVID-19 and Business Interruption Coverage: Pending Legislation

Photo of "COVID-19" spelled in scrabble tiles with illustrated viruses floating above

By Robert R. Sparks

On March 23, we wrote about potential insurance claims arising from COVID-19 shutdowns and disruptions that businesses could assert under the business interruption coverage in their property damage insurance. Since then, bills have been filed in several state legislatures – including Ohio – that seek to ensure that this coverage exists.

In recent days, legislators in New Jersey, Massachusetts, and Ohio have introduced bills directed at business interruption coverage. None of the proposed bills have become law.

The Ohio bill — House Bill 589 — would apply to Ohio companies with 100 or fewer employees with business interruption coverage issued on or before March 9, when Gov. Mike DeWine declared a state of emergency. The proposed bill mandates that insurance policies providing business interruption coverage “be construed to include among the covered perils under that policy, coverage for business interruption due to global virus transmission or pandemic during the state of emergency.”

The insurance industry has been quick to criticize the various bills arguing that they retrospectively re-write insurance policies to require coverage where none exists, even though the Ohio bill would allow for insurance companies to request reimbursement from the state for claims paid as a result of the bill.

As we explained in our previous article, whether coverage is provided by your policy is very dependent on the language of the policy. The insurance industry’s pessimism about coverage prospects is to be expected. There are policies that expressly include coverage for “communicable disease” and others that expressly exclude coverage for a “virus.” Coverage determinations will also be different for those businesses that have closed because an employee or customer on the premises tested positive for COVID-19. In addition, damages can vary from business to business and can also impact the availability of coverage.

If you think you may have a business interruption claim, the experienced insurance lawyers at Strauss Troy will evaluate your coverages provided in your policy in light of the exact circumstances that caused your business interruption. There is no charge for the initial consultation.

Rob Sparks concentrates his practice in civil trial and appellate practice in the areas of consumer class actions, consumer fraud, securities and investment fraud, corporate governance, insurance litigation, and insurance and brokerage matters. He has represented people and businesses harmed by fraud and unscrupulous business practices in state and federal courts throughout the United States.