There is a lot of speculation about legislation requiring insurers to pay business income interruption claims relating to the coronavirus even when coverage is excluded.

Q: If we submit a business income claim on behalf of the insured now and it is denied by the carrier, what happens if this type of legislation is then passed and carriers are forced to pay these claims? Are we better off waiting to see what happens with the legislation or should we submit the claim now?

Response 1: If your client believes they might have a claim, it is your legal duty to submit it to the insurer to evaluate. If the insurer denies the claim and then legislation is passed regarding business income interruption, your client could ask the insurer to reopen the claim.

Response 2: The insurance contract language dictates when a claim should be reported, which is usually as soon as practicable. I would refer claims to the carrier immediately and not wait to see if or when legislation is passed. If it’s passed, you can be pretty certain that it will be challenged in court, potentially all the way up to the U.S. Supreme Court.  

Response 3: If an insured wants to submit a claim, then submit it. Agents are not in the business to deny claims—insurers do that well enough on their own.

Response 4: Submit the claim and let the carrier deny it. They’ll have to reopen the file if the law changes. 

Response 5: I don’t recommend ever sitting on any claims. That’s an errors & omissions claim waiting to happen. 

If the carrier denies the coronavirus business income claim due to policy language and then state legislation is later passed forcing insurers to pay uncovered claims, it should become the insurer’s responsibility to reopen previously denied claims. 

If this becomes a matter of individual states forcing insurers to pay coronavirus business income claims, I have no knowledge of what your state will require insurers to do. 

Response 6: Submit the claim and allow the insurer to deny the claim to ensure you are not complicit in failing to file a claim, which becomes retroactive based on legislation. By filing the claim, you are notifying the carrier of the potential issue of a claim. Remember there are reporting guidelines within the contract.

This question was originally submitted by an agent through the Big “I” Virtual University’s (VU) Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.