Louisiana lawmakers won’t try to force business interruption insurance policies to cover the widespread closures caused by the COVID-19 pandemic.
Sen. Rick Ward, a Port Allen Republican, shelved the proposal amid concerns it could crater the state’s insurance industry and embroil Louisiana in litigation.
In Senate Bill 477, Ward had sought to retroactively require insurance companies to pay for coronavirus losses since March 11 for any business that had a policy for business interruptions, even though most of those policies have exemptions for such an outbreak.
“What the vast majority of business owners have found out was that a shutdown due to a virus or pandemic was an exclusion from coverage,” Ward told the Senate Insurance Committee.
“Sometimes extreme circumstances require some extreme measures to be taken,” he said. “In order to protect some of these businesses that are struggling at best and at worst are going bankrupt, that is something we should consider.”
Republican senators on the committee, many of whom are business owners, said their business interruption policies won’t cover the impact of the coronavirus. But they resisted trying to force the coverage, saying the policies’ fine print indicated the exclusions, even if they didn’t notice them.
Committee Chairman Kirk Talbot, a River Ridge Republican, said he was surprised when he learned that his insurance policy wouldn’t help him with losses related to the COVID-19 disease caused by the coronavirus. Still, he questioned how lawmakers could force the companies to pay for losses if businesses didn’t pay premiums to provide that level of coverage.
“I think premiums would be outrageous if they did cover those things, so I don’t think people would have had the coverage anyway,” said Sen. Mike Fesi, a Houma Republican.
Insurance Commissioner Jim Donelon, a Republican, called Ward’s proposal “dangerous.” He said insurance companies “can’t afford it. The industry will bankrupt.”
Because of the opposition, Ward stripped the retroactive coverage requirement from SB 477.
The rewritten measure, which was sent to the full Senate without objection, simply would require business interruption policies to include a form clearly listing the types of incidents that won’t be covered by the insurance.
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