PRINTER'S NO. 1668
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1127
Session of
2020
INTRODUCED BY IOVINO, FARNESE, TARTAGLIONE, MUTH, ARGALL,
STREET, COSTA AND SCHWANK, APRIL 30, 2020
REFERRED TO BANKING AND INSURANCE, APRIL 30, 2020
AN ACT
Relating to property and business interruption insurance
coverage for COVID-19 Pandemic-related Losses.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the COVID-19
Property and Business Interruption Insurance Act.
Section 2. Legislative findings.
The General Assembly finds and declares as follows:
(1) A novel coronavirus, referred to as COVID-19,
emerged in China, and began infecting humans beginning at
least in December 2019 and, since that time, has spread to
more than 185 countries, including the United States and
killed over 168,000 people worldwide and more than 42,000
persons in the United States.
(2) On March 6, 2020, following the announcement of the
first two presumptive positive cases of COVID-19 in
Pennsylvania, Governor Tom Wolf signed an emergency disaster
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declaration in response to the increased risk of the virus.
(3) On March 11, 2020, the World Health Organization
declared COVID-19 a pandemic.
(4) On March 13, 2020, Pennsylvania had 33 confirmed
cases of COVID-19. In an effort to mitigate the spread of
COVID-19, Governor Wolf ordered the Statewide closure of
schools, grades kindergarten through 12.
(5) On March 16, 2020, as the pandemic continued to
spread throughout this Commonwealth, with the number of
confirmed cases more than doubled to 76, Governor Wolf
ordered the Statewide shutdown of certain non-essential
businesses, including community centers, gyms, entertainment
centers and nonessential retail. The Governor's order closed
dine-in facilities in restaurants and bars and permitted only
takeout and delivery services to continue.
(6) In conjunction with the ordered closures, the
Governor and the Secretary of Health urged the residents of
this Commonwealth to adhere to the practice of "social
distancing" and to self-quarantine if feeling ill or
exhibiting symptoms of COVID-19.
(7) On March 19, 2020, due to the continued community
spread of COVID-19 throughout this Commonwealth, the Governor
ordered all non-life-sustaining businesses to close physical
locations until further notice.
(8) Since then, the Governor has issued a stay-at-home
order for the entire Commonwealth.
(9) As of April 20, 2020, there were 32,284 positive
cases, including 1,112 deaths in this Commonwealth as a
result of COVID-19. Unfortunately, the number of positive
cases and deaths is expected to increase.
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(10) The COVID-19 coronavirus is prevalent throughout
this Commonwealth and constitutes a serious threat to the
health and welfare of our residents.
(11) As a result of the continued spread of COVID-19 and
the pervasive presence of the COVID-19 coronavirus throughout
this Commonwealth, Pennsylvania businesses have been forced
to close their physical locations, and those that can remain
open have drastically reduced their workforce, which has led
to significant adverse impacts to both businesses and
individuals.
(12) The mandated business closures resulting from the
COVID-19 pandemic have resulted in major economic upset
throughout this Commonwealth and businesses are in dire
straits. Prior to this pandemic, many businesses purchased
insurance to account for losses related to business
interruptions.
(13) The insurance industry has responded to claims for
business interruption coverage by Pennsylvania policyholders
with swift and categorical denials of coverage, contending
that such coverage cannot apply to COVID-19 pandemic related
losses.
(14) Supervising the conduct of insurance companies, and
defining the duties and responsibilities of insurers, is
within the inherent regulatory and police powers of the State
to advance the public good. Furthermore, requiring insurers
doing business in this Commonwealth to promptly honor their
insurance policy obligations as to claims arising from the
COVID-19 pandemic is necessary to prevent further economic
disruption and allow businesses to remain functioning in the
face of continued and uncertain closures.
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Section 3. Scope of the act.
Except as provided in section 14, in any claim for insurance
for losses relating to property damage, business interruption,
contingent business interruption, time element, contingent time
element or losses of a similar nature arising from the COVID-19
pandemic, the rules of construction in this act shall apply to
first-party insurance policy provisions that are the subject of
the claims.
Section 4. Limitation of act.
This act does not apply to life, health or disability
insurance, fidelity or surety bonds, credit or mortgage
insurance, title insurance, workers compensation, general
liability or employer's liability insurance, representations and
warranties insurance or to ocean marine, hull and cargo
insurance. Furthermore, this act does not apply to any
government-owned or government-controlled insurance company that
insures property under the act of May 17, 1921 (P.L.682,
No.284), known as The Insurance Company Law of 1921.
Section 5. Choice of law.
Pennsylvania law shall apply to each and every property, all-
risk, business interruption, contingent business interruption,
time element and contingent time element insurance claim where
the property giving rise to the claimed loss is located within
this Commonwealth and the losses claimed to be insured arise out
of, or relate to, the COVID-19 pandemic.
Section 6. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Communicable disease." As defined and insured in a first-
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party property policy, including an all-risk policy.
"Property damage." Direct physical loss, damage or injury to
tangible property or as defined in a first-party property
policy, including in an all-risk policy.
Section 7. Property damage.
(a) Within structure.--If a person positively identified as
having been infected with COVID-19 has been present in, or if
the presence of the COVID-19 coronavirus has otherwise been
detected in, a building, an office, a retail space, a structure,
a plant, a facility, a commercial establishment or other area of
business activity, that area of business activity shall be
deemed to have experienced property damage.
(b) Within municipality.--Buildings, offices, retail spaces,
structures, plants, facilities, commercial establishments and
other areas of business activity located in a municipality of
this Commonwealth in which at least one person present in that
municipality has been positively identified as having been
infected with COVID-19, or in which the presence of the COVID-19
coronavirus has otherwise been detected, are deemed to have
experienced property damage.
Section 8. Communicable disease.
(a) Positive test.--If a person positively identified as
having been infected with COVID-19 has been present in, or if
the COVID-19 coronavirus has otherwise been detected in, a
building, an office, a retail space, a structure, a plant, a
facility, a commercial establishment or other area of business
activity, this area of business activity shall be deemed to have
experienced the actual, and not merely suspected, presence of a
communicable disease.
(b) Presence of COVID-19.--In addition, buildings, offices,
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retail spaces, structures, plants, facilities, commercial
establishments and other areas of business activity located in a
municipality of this Commonwealth in which at least one person
in that municipality has been positively identified as having
been infected with COVID-19, or in which the presence of the
COVID-19 coronavirus has otherwise been detected, are deemed to
have experienced the actual, and not merely suspected, presence
of a communicable disease.
Section 9. Order of civil authority.
The Order of the Pennsylvania Governor, dated March 19, 2020,
Regarding the Closure of All Businesses That Are Not Life
Sustaining, constitutes an order of civil authority under a
first-party insurance policy limiting, prohibiting or
restricting access to non-life-sustaining business locations in
this Commonwealth as a direct result of physical damage at or in
the immediate vicinity of those locations.
Section 10. Order regarding ingress and egress.
The Order of the Pennsylvania Governor, dated March 19, 2020,
Regarding the Closure of All Businesses That Are Not Life
Sustaining, constitutes, under a first-party insurance policy,
an order prohibiting ingress to and egress from all non-life-
sustaining business locations in this Common wealth as a direct
result of physical damage at or in the immediate vicinity of
those locations namely, the presence of the COVID-19
coronavirus.
Section 11. Loss of market.
The loss of market exclusion, and similar exclusions, in a
first-party policy may not be interpreted to apply to preclude
coverage for COVID-19-related losses if one of the reasons for
reduced customer demand for a policyholder's goods or services
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is the same COVID-19 pandemic that gives rise to the
policyholder's losses for which coverage is sought.
Section 12. Applicability.
The following shall apply to this act:
(1) This act shall apply to active insurance policies,
with effective dates on or before March 6, 2020.
(2) This act applies to insurance companies that provide
coverage against property damage, loss of use or occupancy or
business interruption, and similar coverages, with respect to
property in this Commonwealth.
Section 13. Exclusive jurisdiction of the Pennsylvania Supreme
Court.
The Pennsylvania Supreme Court shall have exclusive
jurisdiction to hear any challenge to, or render a declaratory
judgment concerning the validity or constitutionality of, this
act. The Supreme Court is authorized to take such action as it
deems appropriate, consistent with the Supreme Court retaining
jurisdiction, to find facts or to expedite a final judgment in
connection with such a challenge or request for declaratory
relief.
Section 14. Severability.
Each provision of this act and every application of the
provisions of this act are severable from each other as a matter
of State law. If any application of any provision in this act to
any person or group of persons or circumstances is found by a
court to be invalid, the remainder of this act and the
application of the act's provisions to all other persons and
circumstances shall not be affected. All constitutionally valid
applications of this act shall be severed from any applications
that a court finds to be invalid or unconstitutional, leaving
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the valid and constitutional applications to be permitted to
stand alone and in continued effect.
Section 15. Savings clause.
The rules of construction of insurance policy language set
forth in this act do not apply if the application of a rule
results in an interpretation that is contrary to the mutual
intent of the parties, both policyholder and insurer, as clearly
and expressly communicated to each other during the period of
negotiating for, and agreeing to, the terms of the insurance
policy that is the subject of the policyholder's claim for
coverage for COVID-19-related losses.
Section 16. Effective date.
This act shall take effect immediately.
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