Business Interruption Insurance in the Time of Covid-19: Who Should Foot the Bill?

COVID-19-related business closures led to thousands of business interruption insurance claims and lawsuits across the country. However, throughout the history of business interruption policies, obstacles such as virus exclusions and “physical damage” requirements have been added in response to prior pandemics and catastrophic losses. These exclusions and requirements have led to many hurdles and outright denials for those seeking payment on their policies. So, then, can business owners still find some economic refuge in these policies?

Despite outright denials in many courts, at least a handful of federal judges as well as a number of members of Congress seem to think so. Some courts have been using traditional canons of contract interpretation to allow plaintiffs to survive summary judgment motions on their claims, and there is a federal push to pass legislation that would require coverage due to COVID-19-mandated closures. This Note posits that any solution to this economic fallout through business interruption insurance must consider the rational economic needs of insurers and incentivize private capital investment to prevent any one industry—or in the event of federal legislation, the taxpayer—from shouldering this monumental burden.