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Volume XIII, Number 86


March 24, 2023

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33 Members of California Congressional Delegation Ask CA Insurance Commissioner to Ensure Access to Business Interruption Insurance

By letter dated March 31, 2020, 33 bipartisan members of the California congressional delegation wrote to California Insurance Commissioner Ricardo Lara requesting that he use his authority to ensure that insurance companies comply with their business interruption policies. 

After hearing that insurers were denying coverage to various California businesses that purchased business interruption insurance, members of Congress wrote the letter to help businesses get business interruption coverage so they can remain solvent throughout closures due to the COVID-19 pandemic. 

The letter states the following: “We urge you to exercise all authority to ensure the insurance companies comply with their business interruption policies. During this crisis, we must do everything possible to mitigate the devastating impact on small businesses due to the coronavirus pandemic.” Members of the California delegation further wrote, “The coronavirus poses significant challenges to many small businesses and we are urging you to exercise all authority to have insurance companies comply with their business interruption insurance to cover losses caused by a California statewide business shutdown ordered to prevent the spread of coronavirus.” 

In response, property-casualty insurers reaffirmed their position that business interruption coverage is not designed to respond to losses caused by communicable diseases. “Insurance coverage works by spreading risk, but that model simply cannot account for a situation in which losses are catastrophic and nearly universal. Standard business interruption policies do not, and were not designed to, provide coverage against communicable diseases such as COVID-19, and as such, were not actuarially priced to do so,” wrote leaders of insurance trade groups. The leaders further cited estimates that just one month of business interruption losses for small businesses could reach $383 billion, thereby potentially threatening the solvency of the entire insurance industry.

© 2023 Wilson ElserNational Law Review, Volume X, Number 99

About this Author

Paul S. White Partner Insurer Litigation: Coverage/Extra-Contractual Insurance & Reinsurance Coverage Professional Liability & Services

Paul White focuses his practice on complex insurance coverage and bad faith litigation and represents defendants in commercial litigation. Paul's insurance coverage practice includes advising and representing insurers in bad faith litigation and insurance policy disputes, including first-party property policies, general liability coverage, errors and omissions insurance, and media liability insurance. He also advises and represents insurers in subrogation actions on property losses. In addition, Paul has litigated and arbitrated disputes throughout the United States involving domestic and...

Siobhán A. Breen Associate New York Directors & Officers Liability Insurance & Reinsurance Coverage

Siobhán A. Breen represents primary and excess professional liability insurers and drafts coverage opinions with respect to complex insurance coverage matters involving directors and officers liability, errors and omissions liability, miscellaneous professional liability, lawyers professional liability, and employment practices liability.

Prior to joining Wilson Elser, Siobhán’s practice consisted of insurance coverage and insurance defense litigation. Siobhán has experience in securities class actions, shareholder derivative actions, cyber/privacy actions, and professional...