PRINTER'S NO. 1639
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1114
Session of
2020
INTRODUCED BY HUGHES, KEARNEY, FONTANA, SANTARSIERO,
TARTAGLIONE, BREWSTER, SCHWANK, ARGALL, DINNIMAN, BOSCOLA,
LEACH, IOVINO, FARNESE, MASTRIANO, COLLETT, COSTA, MUTH AND
BLAKE, APRIL 15, 2020
REFERRED TO BANKING AND INSURANCE, APRIL 15, 2020
AN ACT
Providing for coverage under business interruption insurance
during the COVID-19 disaster emergency.
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
Insurance Relief Act.
Section 2. Legislative findings.
The General Assembly finds the following:
(1) A novel coronavirus, referred to as COVID-19,
emerged in Wuhan, China, and began infecting humans in
December 2019 and, since that time, has spread to more than
169 countries, including the United States, and killed over
22,000 people worldwide.
(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) COVID-19 constitutes a serious threat to the health
of the residents of this Commonwealth and an emergency, which
has the potential to cause significant adverse impacts upon
the entire Commonwealth population.
(5) 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.
(6) On March 16, 2020, the number of confirmed cases
more than doubled to 76 as Governor Wolf ordered the
Statewide shutdown of nonessential 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.
(7) 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.
(8) On March 19, 2020, due to the continued community
spread of COVID-19, the Governor ordered all non-life-
sustaining businesses to close physical locations until
further notice.
(9) Since then, the Governor has issued a stay-at-home
order for the entire Commonwealth.
(10) As of April 7, 2020, there were 14,559 positive
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cases and 249 deaths in this Commonwealth as a result of
COVID-19. Unfortunately, the number of positive cases and
deaths is expected to increase.
(11) As a result of the continued spread of COVID-19,
businesses have been forced to close and those that can
remain open have drastically reduced their workforce, which
has led to significant adverse impacts to both businesses and
individuals.
(12) Inherent in the police powers of the legislature is
the ability to enact laws that are necessary for the good of
the public. Those laws may result in an impairment of
contract rights when the legislature has a significant and
legitimate public purpose, such as remedying a social or
economic problem.
(13) COVID-19 and the mandated closures have resulted in
major economic upset throughout this Commonwealth, and
businesses are in dire straits. Although businesses may have
insurance to account for losses related to business
interruptions, they are prohibited from making such claims
because of a "virus exclusion" to covered perils related to
global virus transmission and pandemic.
(14) Because of the "virus exclusion," businesses will
be prohibited from making claims under business interruption
or civil authority provisions, which may be their only
lifeline during these uncertain times.
(15) The Insurance Services Office has developed a rider
to provide an insured with the option of purchasing coverage
for business interruptions related to loss or damage caused
by viruses, but to date the form has not been approved.
(16) Permitting coverage for business losses during the
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COVID-19 disease pandemic and Statewide outbreak is necessary
to prevent further economic disruption and allow businesses
to remain functioning in the face of continued and uncertain
closures.
(17) COVID-19 is unlike anything we have experienced,
and the social and economic effects must be mitigated to
ensure the stability and well-being of the residents of this
Commonwealth and the businesses that employ them.
Section 3. 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:
"Civil authority order." The order of the Governor, issued
March 19, 2020, prohibiting or restricting the access to non-
life-sustaining business locations in this Commonwealth as a
direct result of property damage at or in the immediate vicinity
of those locations.
"COVID-19." The disease that is causing the 2019 novel
coronavirus outbreak and global pandemic. The term includes the
novel coronavirus, coronavirus disease 2019 or 2019-nCoV.
"Declared disaster emergency." The proclamation of disaster
emergency issued by the Governor on March 6, 2020, published at
50 Pa.B. 1644 (March 21, 2020), and any renewal of the state of
disaster emergency.
"Insurance company." An insurance company, association,
exchange or any other entity subject to the jurisdiction of the
Insurance Department, excluding 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.
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"Perils." A risk or cause of loss or damage.
"Policy of insurance." An enforceable contract between an
insurance company and an individual or business, including any
endorsement, rider, written or oral binder, cover note,
certificate or other instrument of insurance attached or
relating to the enforceable contract, without regard to the form
of insurance, which provides any of the coverages enumerated in
section 202 of the Insurance Company Law of 1921, except:
(1) Life, annuity, health or disability insurance.
(2) Mortgage guaranty, financial guaranty or other forms
of insurance offering protection against investment risks.
(3) Fidelity or surety bonds or any other bonding
obligations.
(4) Credit insurance, vendors' single interest insurance
or collateral protection insurance or any similar insurance
protecting the interests of a creditor arising out of a
creditor-debtor transaction.
(5) Insurance of warranties or service contracts.
(6) Title insurance.
(7) Ocean marine insurance.
(8) Transaction or combination of transactions between a
person, including affiliates of the person, and an insurer,
including affiliates of the insurer, which involves the
transfer of investment or credit risk unaccompanied by
transfer of insurance risk.
(9) Insurance provided by or guaranteed by a
governmental entity.
(10) Workmen's compensation and employer's liability
insurance.
"Property damage." In a building, office, retail space,
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structure, plant, facility, commercial establishment or other
area of business activity, the direct physical loss, damage or
injury to tangible property, as a result of a covered peril,
including, but not limited to:
(1) The presence of a person positively identified as
having been infected with COVID-19.
(2) The presence of at least one person positively
identified as having been infected with COVID-19 in the same
municipality of this Commonwealth where the property is
located.
(3) The presence of COVID-19 having otherwise been
detected in this Commonwealth.
"Small business." A business that, on the effective date of
this section:
(1) satisfies the United States Small Business
Administration's criteria to qualify as a small business
under 13 CFR Pt. 121 (relating to small business size
regulations); or
(2) has received or will receive funding through a
program administered by the United States Small Business
Administration.
Section 4. Relief.
(a) Covered perils.--Notwithstanding any other law, rule or
regulation, a policy of insurance insuring against a loss
related to property damage, including the loss of use and
occupancy and business interruption, shall be construed to
include among the covered perils coverage for loss or property
damage due to COVID-19 and coverage for loss due to a civil
authority order related to the declared disaster emergency and
exigencies caused by the COVID-19 disease pandemic.
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(b) Coverage limits.--The coverage required under subsection
(a) must indemnify the insured for losses related to the
declared disaster emergency subject to the policy limits for
loss of business or business interruption and subject to the
maximum individual policy limits. The following shall apply:
(1) Insureds classified as a small business shall
receive 100% of the policy limit for eligible claims for
covered losses.
(2) Insureds not classified as a small business shall
receive 75% of the policy limit for eligible claims for
covered losses.
Section 5. Rulemaking authority.
The Insurance Commissioner shall promulgate rules and
regulations necessary to effectuate the administrative
provisions of this act.
Section 6. Applicability.
This act shall apply:
(1) To active insurance policies with effective dates
prior to March 6, 2020.
(2) To insurance companies providing coverage against
loss or damage to property, which includes the loss of use
and occupancy, and business interruption in this
Commonwealth.
Section 7. Exclusive jurisdiction of Supreme Court.
The Pennsylvania Supreme Court shall have exclusive
jurisdiction to hear any challenge to or to render a declaratory
judgment concerning the 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
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connection with such a challenge or request for declaratory
relief.
Section 8. Effective date.
This act shall take effect immediately.
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