Pennsylvania has joined five other states - New Jersey, Ohio, Massachusetts, New York and Louisiana – in introducing legislation to force insurers to pay for COVID-19-related business interruption losses. House Bill 2372, the “Business Interruption Insurance Act,” was introduced with 37 bipartisan sponsors and referred to the Pennsylvania House of Representatives Insurance Committee on April 3, 2020. The Bill would affect insurance policies in force on March 6, 2020 in which the insured has fewer than 100 eligible employees in Pennsylvania.
If passed, House Bill 2372 would require an insurer to cover and indemnify insureds suffering business interruption losses due to the ongoing COVID-19 pandemic “subject to the broadest or greatest limit and lowest deductible afforded to the business interruption coverage under the insurance policy.” Specifically, the bill provides that casualty and property insurance policies shall be construed to include coverage for business interruption due to global virus transmission or pandemic. An insurer that pays for such COVID-19-related losses would then be allowed to “apply to the [Pennsylvania] commissioner for relief and reimbursement by the commissioner from money collected and made available for this purpose…”
The Bill certainly leaves many questions unanswered. Similar to legislation proposed in other states, House Bill 2372 fails to mention if it applies to policies that specifically exclude coverage for a loss due to viruses or bacteria. Additionally, the language of House Bill 2372 leaves open the possibility that insurers will be required to provide coverage without “direct physical loss or damage” to covered property and without regard for the specific language of civil authority orders.
Moreover, subsequent legislation referred to the Pennsylvania House of Representatives Committee of Commerce may constitute an acknowledgment that the constitutionality of House Bill 2372 is unclear. On April 6, 2020, House Bill 2386 proposed the establishment of the “COVID-19 Disaster Emergency Business Interruption Grant Program” to provide funding for the continuing operation of businesses during and after the COVID-19 disaster emergency. House Bill 2386 provides that, “[a] business shall be eligible for a grant…if: (1) The business has submitted an insurance claim under a business interruption insurance policy and the insurance claim was denied prior to applying for a grant and (2) the business demonstrates in its application that the business has been adversely impacted by the COVID-19 disaster emergency.”
Currently, both proposed bills have been referred to the appropriate committees and have not been scheduled for further consideration. Chartwell Law’s insurance coverage attorneys remain committed to assisting their clients in these uncertain times and will keep you apprised of all updates in the law. Should you require assistance in handling COVID-19 claims, please do not hesitate to contact us.