WASHINGTON (April 10, 2020) – The R Street Institute issued the following statement from R.J. Lehmann, director of finance, insurance and trade policy, in response to President Donald Trump’s comments that insurance companies should pay business interruption claims arising from shutdowns caused by the COVID-19 pandemic:

“The president is misinformed about the scope and nature of business interruption coverage, which is designed to provide revenue protection for businesses whose properties suffer physical loss from natural causes like fires or windstorms or human-caused events like vandalism or terrorism. Standard commercial insurance policies typically do not even provide business interruption coverage for power loss unless there is demonstrable damage to the insured property. There may be unusual cases in which nonstandard contracts contain language that would cover pandemic-related shutdowns, but the industry as a whole has intentionally excluded this risk because it is far too correlated across geographies and sectors. Any government action to rewrite the terms of coverage retroactively threatens the solvency of the sector and its ability to pay legitimate claims for which policyholders have paid premiums in good faith. That includes both claims that do arise from COVID-19, such as workers’ compensation claims for medical workers and first responders, and unrelated claims for wildfires, hurricanes and other disasters that we can expect in the months ahead.”