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As governments look to offset financial business losses resulting from COVID-19, some state legislatures have explored further exploiting the insurance industry by introducing bills addressing business interruption coverage. Business interruption coverage typically applies only to losses resulting from physical damage to property, such as that caused by a natural disaster, and generally inapplicable to losses caused by viral or bacterial pandemics.


These bills would force many commercial property insurers to provide retroactive coverage to insureds for losses resulting from the COVID-19 pandemic regardless of the policies’ provisions and premiums. Currently there are seven states with business interruption insurance bills and while they apply to property and casualty lines of insurance, the legislation proposed in New Jersey, New York, and South Carolina would require those states to assess all insurers to pay for claims. At the federal level, there is currently ongoing discussion on the issue. NAIFA is closely following developments at both state and federal level while working with coalition partners to tackle this issue head-on.


Business interruption policies usually include explicit coverage exclusions for viruses or bacteria because of the potential magnitude of the spread. To date, U.S. Reps. Ted Budd (R-NC) and Steve Stivers (R-OH) have written letters of support that voice concern that retroactively adjusting insurance policies would be both an unfair and illegal practice.


NAIFA continues to oppose any legislative measures that would retroactively change business interruption provisions to have them cover COVID-19 related losses. NAIFA is continuing to work with legislators and industry partners to ensure that potential legislation combating the COVID-19 crisis is addressed in a fair manner that benefits the most possible individuals and business.