NEW RELEASE: FAIR Explainer On COVID-19 and Business Interruption

The COVID-19 pandemic has brought significant disruptions to the U.S. economy, particularly to its business owners suffering from unsustainable income losses. FAIR’s new one-minute video highlights the role the insurance industry has upheld throughout the crisis and explains how trial attorneys’ attempts to retroactively include the uninsurable pandemic risk in business interruption insurance contracts are detrimental to policyholders, communities, insurers, and economic growth. 

Only the federal government has the financial capacity to provide the critical pandemic relief business-owners need today and to protect them from such events in the future.

The video can be viewed here. For more information and resources, go to


Another Court Agrees: COVID-19 Does Not Cause Physical Damage

In another substantial development in business interruption (BI) litigation, a District of Columbia Superior Court judge ruled that COVID-19 does not lead to physical property damage, arguing that the plaintiffs’ business insurance policy is not triggered because the shutdown did not amount to direct physical loss.

The judge reiterated what insurance contracts make clear: standard BI policies require “direct physical loss or damage” to the business–or structural alteration–such as in a fire, or for a civil authority to close off the area to a business nearby. The coronavirus leaves no visible imprint or structural alteration, and therefore does not trigger BI coverage.

The case ruling pointed out the following:  

  • To trigger the policy, the “loss” has to directly impact the property itself. While plaintiffs in this case argued that the civil orders were the “direct” reason for the closing, “the judge wrote that the orders only directed businesses to take certain actions but did not effect any direct change to the properties in and of themselves.” (LAW360, 8/7)
  • The judge also stated plaintiffs “failed to put forth any cases supporting their contention that a mayoral order constitutes direct physical loss under an insurance policy,” instead citing several cases where courts have rejected coverage where there was no direct physical harm to the properties. (Insurance Journal, 8/7)
  • While the plaintiffs argued that the losses were physical because COVID-19 is “material” and “tangible” rather than abstract, “the judge found the plaintiffs offered no evidence that the virus was present in their inured properties and found that the mayor’s orders did not have any material or tangible effect on the insured’s properties.” (Insurance Journal, 8/7)

This latest verdict follows a July Michigan state court ruling that also sided with insurers, finding that tangible alteration to a property is required to trigger BI coverage. 

For more information, visit


COVID-19 Disrupts Workers Compensation Insurance

Industry experts and economists discussed the impact of COVID-19 on workers compensation in a recent webinar hosted by the National Council on Compensation Insurance (NCCI) and the Insurance Information Institute (Triple-I).A few key takeaways:

  • Covid-19 has both direct and indirect impact on workers compensation insurance. Sean Cooper, Practice Leader and Senior Actuary at NCCI, argues that direct COVID claims will have an upward influence on claim costs and frequency, while limited opportunities of returning to work could increase both the cost and duration of claims.
  • Common presumptions resulting from proposed legislation and state executive orders are rebuttable. “Workers compensation laws cover injuries arising out of and in the course of employment,” said Jeff Eddinger, Senior Division Executive at NCCI. Although it is reasonable to presume that healthcare workers who come in direct contact with COVID patients contracted the virus during the course of their employment, it is important to determine whether other essential workers receive more exposure from work or in public.
  • A pandemic catastrophe provision could be a solution to workers compensation insurance in future pandemics. “Traditional methods of calculating estimated impact do not necessarily apply to catastrophic events that have very low frequency and very high severity,” concluded panel experts. NCCI is currently engaging with an external modeling firm to determine if a pandemic catastrophe provision would be appropriate for future filings.  

You can watch the full webinar here and event highlights here. NCCI also published a white paper on the potential impacts of COVID-19 on workers compensation and enumerated various scenarios in its rates estimation tool.

For more information and resources, go to


Sen. Ben Nelson Affirms A Government-Backed Pandemic Response Is Critical

As you may be aware, attorneys nationwide are pursuing widespread litigation against insurers, in an attempt to contort business interruption (BI) policies to cover businesses’ losses from the coronavirus pandemic.

As the insurance regulation expert and former Senator of Nebraska Ben Nelson explains in a recent op-ed, these lawsuits are misguided as the focus should be on passing government-backed pandemic relief—the viable solution struggling businesses need.

Below are key points from Sen. Nelson:

  • Global pandemics are uninsurable. “The cost of underwriting these pandemics would be massive for insurers—nearly $400 billion per month—which would make such coverage extremely, and likely prohibitively, costly for small business owners. Requiring insurers to pay out for uncovered claims would be unfair to other policyholders who already paid to have their claims insured and would threaten the ability of the industry to serve policyholders and lead to the collapse of the industry, especially as we enter the busy hurricane and wildfire summer season.”
  • The litigation trend is distracting and a waste of resources for struggling small businesses. “BI litigation is not only unproductive and unnecessary, it is also a clear attempt to profit off small business owners and disrupt progress toward sustainable, government-backed solutions to the economic challenges our country is facing.”
  • Amid this crisis, the federal government is the only entity with the capacity to support small businesses and the broader economy. “[O]nly the federal government has the financial capacity to provide the critical relief small businesses need today. I’ve witnessed first-hand debates regarding whether the government should intervene during an economic crisis. Given the scale of this pandemic and economic recession, a federal response is critical. The government has already taken steps to help provide safety nets for Americans and industries—from stimulus checks to bailout money—and continuing to support small businesses in need is merely the next step.”

You can read the full op-ed here. This post can be viewed here, and for more information and resources, visit