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1 1 (December 21, 2021)

handle is hein.crs/govegvo0001 and id is 1 raw text is: Congressional ____ * Research Service Business Interruption Insurance and COVID-19 Updated December 21, 2021 The economic disruption from the Coronavirus Disease 2019 (COVID-19) pandemic has provoked debate among insurers, policyholders, and other stakeholders about who is responsible for these losses. The loss of income from mandatory or voluntary closures, supply chain disruptions, and reduced demand due to social distancing measures has induced businesses of all sizes to seek compensation from insurers. The focus of the policy debate has been on commercial insurance that covered income losses frombusiness interruption (BI) and similar insurance that covered losses from event cancellation. Such concerns may be revived as businesses consider closures due to the Omicron variant. Commercial Property Insurance Most businesses carry commercial property insurance, including coverage for damage to their building and contents due to a covered cause, such as a fire or windstorm. Viruses and infectious diseases are generally not designated perils in a standard policy, although all-risks coverage might include COVID-19. Following previous health crises, many policies now contain explicit exclusions for virus or bacterial losses. In 2006, the Insurance Services Office introduced an exclusion for loss due to virus or bacteria that applies to property damage to buildings or personal property and endorsements that cover business income, extra expense, or action of civil authority. This language excludes coverage for loss or damage resulting from any virus or microorganism that induces physical distress, illness, or disease. Physical Loss or Damage Requirement Property insurance policies typically require direct physical loss or damage to tangible property. For policies without an exclusion for viruses, the determination of coverage related to the coronavirus may turn on the definition of physical damage. When a business remains habitable but has been closed as part of a mandatory or voluntary closure to protect against contamination, it has probably not suffered a direct physical loss. If a property has become physically contaminated and uninhabitable due to coronavirus, there may be a basis to claim that a direct physical loss has occurred. Many lawsuits challenging the physical damage requirement have been filed, arguing that the virus physically infects the surface of Congressional Research Service https://crsreports.congress.gov IN11295 CRS INSIGHT Prepared for Membersand Committeesof Congress

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