As the spread of COVID-19 decimates private enterprises across the United States, many businesses  expect to turn to their insurers in hopes of discovering safety net — business interruption coverage. Business interruption insurance is the type of policy that companies use to claim cash payouts for lost revenue due to disasters that force businesses to stop operations. The most common types of covered losses include fire, wind, water pipe breaks, and lightning.

With businesses putting their operations on hold due to government-mandated shutdowns, a wave of claims and litigation centered on business interruption insurance is already happening and will increase once the initial health crisis subsides. While the outcome of claims and related litigation is unpredictable at this point, in the interim we recommend the following for insurance companies to prepare:

• Review Pertinent Policy Language: Review policies, forms, and endorsements to decide if the pertinent language triggers a payout to an insured business. Variations in policy language present an unpredictable future for recovery of business losses due to COVID-19, but many policies exclude business losses caused by a virus or bacteria.

• Follow Legislative Response: Both federal and state governments are currently addressing whether or not to give businesses monetary relief from Coronavirus related losses.  However, some states have proposed bills that would require insurers, who give business interruption coverage, to cover such losses even when virus-related losses are specifically excluded or limited.

The RumbergerKirk COVID-19 Task Force will continue to monitor all legislation, and federal laws and agencies, and keep our clients updated to navigate the changing landscape.