Do “all-risk” property insurance policies cover business interruption losses stemming from the COVID-19 pandemic? That is the multimillion-dollar question, and it is unfortunately one whose answer is not yet entirely clear. As a threshold matter, it depends on the language of the property insurance policy, and, specifically, whether or not the policy contains an exclusion for losses resulting from “viruses”. It also depends on whether losses resulting from governmental orders or other actions are excluded, and whether the losses at issue can be characterized as relating to the virus or to a governmental stay-at-home order attributable to the virus. The language of the particular insurance policy is accordingly of paramount importance, and should be studied carefully with the aid of an experienced attorney.

Despite the foregoing uncertainty, some clarity has emerged in the months since the pandemic began. At the state level, various states, including New York, have introduced legislation seeking to shift to insurers some amount of responsibility for covering COVID-19 property insurance losses. Whether such legislation is ultimately enacted, and what it looks like when it emerges from the committee process, still remains to be seen. Also unclear is whether and to what extent states will distinguish, for the purpose of such legislation, between policies with virus exclusions and those without, an answer which may vary from state to state. In New York, Assembly Bill A-10226B, styled “AN ACT in relation to requiring certain perils be covered under business interruption insurance during the coronavirus disease 2019 (COVID-19) pandemic,” was introduced on March 27, 2020, and remains in committee. At the federal level, H.R. 7412, styled “A BILL To establish a temporary voluntary program for support of insurers providing business interruption insurance coverage during the COVID-19 pandemic, and for other purposes,” was introduced on June 29, 2020, and likewise remains in committee. While New York’s A-10226B focuses on ensuring that insurers provide coverage relating to COVID-19-related losses, the focus of H.R. 7412 is to provide a financial incentive for insurers to settle certain COVID-19 property insurance claims early.