Louisiana, like many other states, has proposed two insurance coverage bills in response to COVID-19’s devastating impact on businesses. While Louisiana’s House bill is limited to small businesses, the Senate bill is not. Both require insurers to cover COVID-19 related losses under certain circumstances.
House Bill 858 requires every insurance policy issued to insureds with less than 100 full-time employees that covers loss or damage to property, including the loss of use and occupancy and business interruption, to cover COVID-19 losses. Those policies “shall be construed to include among the covered perils under such a policy, coverage for business interruption due to global virus transmission or pandemic, as provided in the Emergency Proclamation Number 25 JBE 2020 and the related supplemental proclamations concerning the coronavirus disease 2019 pandemic” (see HB 858). In response to COVID-19, the governor issued Emergency Proclamation Numbers 25 JBE 2020, 27 JBE 2020, 30 JBE 2020, 32 JBE 2020, 33 JBE 20202, 37 JBE 2020, and 41 JBE 2020. Proclamation Number 25 declared a state of emergency and the supplemental proclamations gradually extended the restrictions in the state. On April 2, 2020, Emergency Proclamation 41 JBE 2020, among other things, renewed all the previous COVID-19 proclamations and continued the general stay-at-home order (absent essential activities), closure of nonessential businesses, a restriction on those businesses not defined as nonessential to continue operations with only essential employees and minimal public contact with no more than 10 gathering at once, and a curfew from 10:00 p.m. to 5:00 a.m. If this bill becomes law, the scope of available coverage could involve interpretations of governmental proclamations. The bill also defines the coverage period by requiring insurers to indemnify policyholders, subject to limits, for business interruption and loss of business that occurs during the duration of the public health emergency.
Senate Bill 477 is not limited to particular insureds and likewise requires business interruption coverage to include COVID-19: “[n]otwithstanding any other provision of law to the contrary, every policy of insurance in force in this state on March 11, 2020, and thereafter insuring against loss or damage to property that includes the loss of use, loss of occupancy, or business interruption shall be construed to include among the perils covered under that policy, coverage for business interruption due to imminent threat posed by COVID-19 [. . .]” (see SB 477. Under this bill, the “imminent threat posed by COVID-19” constitutes a covered peril, in an apparent response to insurers’ expected threat defense, i.e., that fear or threat of the virus does not trigger coverage. Under this bill, it does.
Senate Bill 477 also requires any business interruption policy issued on or after August 1, 2020, to include a notice of all exclusions on a designated form signed by the insurer and either the named insured or the named insured’s legal counsel. The signed exclusion form will become a rebuttable presumption that the insured knowingly contracted for the coverage with the specified exclusions. Insurers may seize on the countersignature requirement as a defense to policyholder claims that they did not understand the coverage sold to them.
Watch this blog for future updates.