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Pennsylvania, along with New York, Ohio, Massachusetts, New Jersey, Louisiana, and South Carolina, has introduced legislation that would force insurance carriers to cover business interruption claims due to COVID-19. Many other states are likely to follow.
Pennsylvania House Bill 2372 would apply to businesses with fewer than 100 full time employees. Full time employees are defined as employees that work 25 or more hours per week.
House Bill 2372 is sponsored by a group of 37 bipartisan Pennsylvania legislators. The bill would require insurance policies that cover business losses incurred due to “loss or damage to property” to expand that coverage to include “business interruption due to global virus transmission or pandemic.” Therefore, lost profits and expenses incurred due to COVID-19 would be covered by the insured party’s business interruption policies.
Claims for business interruption losses should be supported by detailed projections of lost profits incurred from the date of the National Disaster Declaration March 6, 2020 through the date of restoration. This is known as the “restoration period.” Generally, the date of restoration is the date that normal business operations are resumed. It is unknown at this time how the restoration period will be determined. A partial list of supporting documentation recommended to file along with your claim can be found in our previous article here.
Insurers would be required to cover claims subject to “the broadest or greatest limit and lowest deductible afforded to business interruption coverage under the insurance policy.” Insurers that pay claims under proposed House Bill 2372 would be able to apply to the Pennsylvania Insurance Commissioner for reimbursement.
To date, House Bill 2372 has not been passed and has been referred to the House of Representatives Insurance Committee. In the interim, Pennsylvania legislature also introduced House Bill 2386, the COVID-19 Disaster Emergency Business Interruption Grant Act. Businesses that receive grants under House Bill 2386 would be required to remain open and not lay off any employees for the duration of the COVID-19 disaster emergency. To date, House Bill 2386 has also not been passed.
The Insurance Industry maintains that forcing coverage of COVID-19 related claims will devastate the industry as premiums collected for business interruption insurance did not contemplate such coverage.
Many attorneys dispute the insurance industry’s almost automatic refusal to cover COVID-19 related business interruption claims and are pursuing legal action for those insured parties covered by policies in effect as of March 6, 2020.
The basis for the positions asserted by the legal community stems in the fact that businesses were forced to close due to the presence of COVID-19 or otherwise compromised by government mandate therefore suffering loss or damage to property.
Louis Plung & Company’s highly dedicated and experienced litigation support group offers clients and attorneys expert experience in preparing and defending Lost Profits reports that support business interruption claims. For assistance and further information, please contact Catherine T. Marchelletta CPA, MST Partner at 412-281-8771 or by email at [email protected].
Our team is here to offer sound advice, clear guidance, and knowledgeable input to help you achieve financial relief during this fraught time. Contact us today to discuss how we can accommodate your unique situation.