In the United States, as in many other countries, the response to the COVID-19 pandemic has resulted in the shut-down of many businesses and disruption in many others. There is currently some uncertainty about the extent to which loss of income will be covered by business interruption insurance.

A number of lawsuits have already been filed over business interruption coverage disputes between policyholders and insurers.1 Insurers and trade groups have noted that pandemics are excluded in many current business interruption insurance policies and these policies were not designed to and do not provide coverage for diseases such as COVID-19. On March 18, 2020 members of Congress sent a letter to insurance industry associations urging them to work with insurance companies to “recognize financial loss due to COVID-19 as part of policyholders’ business interruption coverage.”

In addition, a number of state legislatures have proposed bills to require insurers to retroactively cover COVID-19 related business interruption losses even if such losses are not covered by the plain language of the insurance policy.2

In this guide, we provide the necessary context for assessing the scale of potential COVID-19 business interruption claims and relate the COVID-19 insurance experience to historical events in the insurance industry.3