COVID-19 + Business Interruption — Part II: Proposed Federal Insurance Legislation

  |   April 27, 2020

As discussed in Part I of this article, one crucial topic on the future of your business may be whether you can file a successful insurance claim to recoup your losses.

Consider: For the first time since World War II, the All England Lawn Tennis & Croquet Club (AELTC) cancelled The Championships 2020, aka Wimbledon. After 17 years of paying approximately $2 million in annual premiums for pandemic insurance coverage, Wimbledon is estimated to recoup $141 million from its insurance policy, which contained an infectious disease clause. But, unlike the AELTC, most commercial businesses do not have separate insurance products for virus, bacterium or other microorganism coverage – and these policyholders are in need of immediate relief from the COVID-19 pandemic.

As COVID-19 evolves, legislative authorities are beginning to propose federal statutes that could help with business interruption (BI) claims. A number of drafts of a Pandemic Risk Insurance Act (PRIA) have been circulating around Congress, which include:

  • Business Interruption Insurance Coverage Act of 2020, which would retroactively change BI insurance contracts that excluded pandemic and virus coverage; and
  • Pandemic Risk Insurance Act of 2020, which would create a (voluntary) reinsurance program where the federal government will help participating insurers pay out on BI claims.

Although both of the above-proposed Acts are still in early draft phases, we understand that the insurance industry is very much against any federal legislation that would help facilitate the payments of BI losses. Ultimately, coverage decisions will be based on policy language and the developing law.

Regardless, to obtain coverage, planning to submit a BI claim is a must. We suggest you act now and, with the assistance of your organization’s financial and legal teams, assemble the documentation to support a claim. The REDW COVID-19 Task Force will continue to monitor and analyze developments. We have also launched a Resource Hub to keep you updated as developments unfold.

We are here to answer questions and help position your business to capitalize on the opportunity when it comes. Please contact REDW Principal and Business Valuation Practice Leader Brian Foltyn.

Read Part I of this article, “COVID-19 + Business Interruption.”


REDW is committed to keeping you informed at all times, but especially during a crisis of the magnitude of the COVID-19 pandemic. Stay connected with us on LinkedIn and @REDWLLC. Or check out some of our other updates here.

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