COVID-19 and Business Interruption

Commercial property insurance policies that include business interruption coverage generally are not intended to cover disease or pandemic-related losses.

Business interruption insurance covers the financial impact of an interruption to business caused by physical property damage, such as a fire. Viruses, like COVID-19, do not cause such damage, so they are not typically covered.

Retroactive mandates that require insurance companies to cover risks they never assumed would significantly undermine their ability to pay other types of covered claims—such as wind damage, fire losses, and automobile crashes.

By The Numbers

$1-$1.1 TRILLION

The estimated potential losses for all businesses in the U.S. of all sizes.


The total surplus for all of the U.S. home, auto, and business insurers combined to pay all future losses.


Estimated closure losses just for small businesses with 100 or fewer employees.


The International Monetary Fund estimates that COVID-19 is likely to cause $9 trillion in global losses.

Ramifications of Retroactively Rewriting Contracts

  • Retroactively rewriting contracts for products that were never sold could have dramatic repercussions for all policyholders—in addition to the broader economy and supply chain.
  • Industry stability is especially important in a time of increased natural catastrophes. Those who rely on insurers to keep their promises in existing policies should not be put at risk.
  • Changing property insurance perils retroactively is unprecedented and did not happen after any of the most recent catastrophic events, from Hurricanes Andrew and Katrina to 9/11 and the Boston Marathon attack to Deepwater Horizon, H1N1 or the California wildfires.
  • The cost impact of retroactively changing insurance policies cannot be overstated as the COVID-19 crisis is global. It is not even possible to estimate it as the crisis continues to unfold.
  • Rewriting existing insurance contracts by nullifying the virus and communicable disease exclusions or the direct physical damage requirement ignores clear constitutional provisions.
  • Retroactively raiding funds insurers have set aside for other consumers’ risks will create false promises that will only result in years of costly litigation without benefit to anyone.
  • Equally important, taking such action for insurance policies undermines a bedrock principle of the U.S. free market system, jeopardizing the certainty of contracts for all businesses.
  • If insurance contracts can be retroactively nullified, no contracts are safe.

Solutions for COVID-impacted Businesses and Workers

  • Insurers understand the urgency of helping businesses and individuals recover from this unprecedented crisis and mitigate a larger shut down of the economy. That’s why they are:
    • Voluntarily implementing new discounts and refunds for policyholders.
    • Expanding flexible payment solutions for families, individuals, and businesses.
    • Suspending premium billing for small businesses such as restaurants and bars.
    • Pausing cancellation of coverage for motorists due to non-payment or policy expiration.
  • Only the federal government can be the bridge for a crisis of this proportion. We support federal assistance programs that deliver aid directly to vulnerable business communities, particularly small businesses.
  • Insurers have also joined a broad business trade coalition calling for the COVID-19 Business and Employee Continuity and Recovery Fund—which would provide immediate grants to impaired businesses—to be included in the next federal COVID-19 relief package.

Regulation of Insurance

  • Property casualty insurance is stringently regulated at the state level for solvency, price adequacy, and consumer protection.
  • The National Association of Insurance Commissioners (NAIC) affirmed in a statement on March 25, 2020 that, “While the U.S. insurance sector remains strong, if insurance companies are required to cover such claims, such an action would create substantial solvency risks for the sector, significantly undermine the ability of insurers to pay other types of claims, and potentially exacerbate the negative financial and economic impacts the country is currently experiencing.”
  • Furthermore, the NAIC stated that, “…swift action by Congress to directly address the needs of citizens and our economy is the most effective and expedient means to addressing the devastating impact of COVID-19.”