Resolving Issues In Business Income Insurance Resulting From Government Mandated Shutdowns During Declared Public States of Emergency
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Date
2023-05
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The Ohio State University
Abstract
The COVID-19 Pandemic brought forth an unprecedented time in American history. As the pandemic first rolled through the country businesses were required, by government order, to shut down. As a result, these businesses lost large amounts of revenue and turned to their commercial insurance policies to fill the gap. However, the insurance industry had planned well for such situations and denied coverage on a large majority of claims. This research analyzes the reasons why insurance companies specifically wrote coverage exclusions for pandemic related events among other potentially catastrophic loss categories. Particular attention is paid to the seven principles of insurance, which guide the solvency of different insurance policy coverages.
Following the denial of coverage by insurers many business owners took the decisions to the court system. This research analyzes the legal arguments and court decisions made during the appeal of businesses to the courts for coverage denials. Analysis of existing insurance law in the state of Ohio and the decisions made by the courts in these cases allows for better understanding of insurance contracts and actions that can be taken in the future. Despite business owners' best efforts, the courts continued to turn down these legal challenges, and businesses were left empty handed.
There were many different actions taken by different entities to help remedy these issues. The Insurance Services Office (ISO), the leading organization governing commercial insurance, offered a new line of endorsements, but these were minimal in scope and ultimately did not provide much in the ways of recovery for business owners. Several states and the federal government proposed various forms of legislation for supporting businesses, but few of these bills made it into codified law. Of the few that made it through, they were entirely retroactive, and so their actual functionality was very limited.
By researching these proposals as well as existing government-backed insurance programs, this research creates a new policy proposal to proactively manage events that take place during declared public states of emergency in the state of Ohio. This research will provide methods for solving business interruption issues for pandemics and other similar potentially catastrophic events. This research extends the coverage proposal to include shutdowns required by declared states of emergency in the state of Ohio.
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Keywords
insurance, business income, law, public policy, COVID-19