Business Interruption Insurance Coverage Act of 2020: Yet Another Reason to Promptly Notify Insurers of COVID-19 Losses

Businessman standing in darkened room

Proposed federal legislation could completely and definitively resolve the debate in favor of coverage for policyholders.

May 25, 2020
James Hultz - Newmeyer Dillion

Business interruption coverage stemming from the COVID-19 pandemic is a matter of intense debate. The number of policyholder lawsuits continues to rise sharply and an increasing number of state legislatures are considering laws to specifically address such coverage.

Now, additional proposed legislation at the federal level could completely and definitively resolve the debate in favor of coverage for policyholders.

The Business Interruption Insurance Coverage Act of 2020

On April 14, Congress introduced the Business Interruption Insurance Coverage Act of 2020 (the “Act”) which, if passed, would require insurance companies to cover business interruption losses due to “viral pandemics, forced closures of businesses, mandatory evacuations, and public safety power shut-offs.” The bill further states:

Any exclusion in a contract for business interruption insurance that is in force on the date of the enactment of this Act shall be void to the extent that it excludes losses specified . . . .

The draft legislation also specifies that it preempts state approval of any contrary exclusion and renders such approval “void to the extent that it excludes losses specified.”

Mr. Hultz may be contacted at james.hultz@ndlf.com



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