Property insurers are off the hook for COVID-19 business insurance losses in Louisiana. Lawmakers in the Senate Insurance Committee passed Senate Bill 477 but only in part.
“What would have made insurance companies retroactively pay for COVID-19 business interruption even though it wasn’t covered in the policy was amended out, leaving only the requirement that insurers must clearly list what’s covered and what’s not,” said Senate Insurance Committee Chair Kirk Talbot (R-River Ridge)
The bill, introduced on March 31, 2020 by Senator Rick Ward, had proposed business interruption coverage retroactive to March 11, 2020, the day Gov. John Bel Edwards declared a public health emergency in response to the coronavirus.
Amar
“The bill didn't deal with specifics,” Sen. Talbot told the Louisiana Record. “It was just every insurer has got to pay. You know what would happen is these insurance companies that never collected a premium to cover a pandemic they're now responsible for, you're going to bankrupt the industry. Then guys like me, none of us, will have business interruption insurance because they'll pull out of the state and we're left high and dry.”
Renee Amar, vice president for policy and government affairs at the Pelican Institute for Public Policy, said the cost of doing business in Louisiana is already too high.
“Adding more government intervention in the private sector will only increase these costs,” Amar told the Louisiana Record. “We have some of the highest insurance premiums in the nation, and the extra costs this legislation adds to insurers will almost certainly be passed down to Louisiana consumers.”
The proposed bill came about after multiple businesses filed COVID-19 claims against business interruption policies and were told by insurers that pandemics are not covered even if it is the shelter in place orders that caused the businesses losses and not the coronavirus itself.
“If you're a business owner, you need to sit down with your agent and get him to explain your policy,” said Sen.Talbot in an interview. “But the good thing is that the part that stayed in the bill, which we all agreed on, is they need to be a little clearer on that policy. What is included and what is excluded. I think the rest of that bill will pass the way it is and that that's a good step in the right direction.”
As of May 14, 2020, the number of COVD-19 cases statewide is 33,489 and fatalities is 2,351, according to the Louisiana Department of Health.
“The bill will be taken up before the full Senate,” said John W. Tobler, deputy commissioner of public affairs with the Louisiana Department of Insurance.
Sen. Talbot said he had discussed pandemic coverage with his insurance agent but if he had exercised the option, it would have made his policy more expensive.
“I don't remember him going over that with me but my policy, unfortunately, doesn’t cover it,” Sen. Talbot said. “With my business, we're getting PPP money and small business loans.”
PPP money is paycheck protection granted through the Small Business Administration that was created to help businesses hold on to their employees during the coronavirus plague.
“In the Pelican State, we have a tendency to look to the government to solve our problems, and while these government solutions seem appealing in the short term, they inevitably lead to greater burdens on taxpayers' wallets,” Amar said in an interview.
Similar legislation has been introduced in the District of Columbia, New Jersey, Pennsylvania, New York, Ohio, Massachusetts and South Carolina, according to media reports.
Business owners can turn to the courts, according to Sen. Talbot.
"Different insurance companies write different types of contracts," said Sen. Talbot who owns Lucky Dogs. "I don’t mean to insinuate that every contract is great but I would assume some are. If business owners feel justified, they can go to court and let a judge or jury decide. That’s an option for them."