Pa. Democratic lawmakers push bill to help business owners collect on COVID insurance claims

Saucon Valley Massage owner Westley Morris knew his business would take a hit after Gov. Tom Wolf’s March 19 coronavirus mitigation business shutdown order, and he thought his insurance policy might cover it.

Morris, whose business is in Hellertown, called his insurance representative and learned he was wrong.

“He said they do not cover business interruption due to a national pandemic,” Morris said. “My argument was I wasn’t shut down by the pandemic, I was shut down by Gov. Tom Wolf.”

Many business owners across the state have had similar experiences, and some state lawmakers want to change that. Several bills related to insurance for “business interruption” situations like the pandemic have been put forth in Harrisburg.

Democratic state Sen. Pam Iovino of Allegheny County recently floated a bill that applies specifically to policies with business interruption coverage that includes a “civil authority” clause.

The bill seeks to get rid of the ambiguous policy language that prevents many businesses from collecting on insurance claims tied to the pandemic, forcing them to file lawsuits.

“We hear today that too often, too many claims are being denied due to ambiguous language,” Iovino said. “Our small businesses need to know that a lifeline they planned for is available and within reach.”

Legal battles over insurance coverage during the pandemic have become so numerous that the University of Pennsylvania Carey Law School maintains a “Covid Coverage Litigation Tracker” on its website.

As of Sunday, the tracker showed more than 1,000 lawsuits filed nationwide.

Several business operators whose operations were curtailed in the pandemic and who were contacted by The Morning Call said their insurer or an agent made it clear that their policy did not provide coverage.

Craig Fioravante, longtime owner of an insurance agency in Berks County, said insurance companies view the policies as legal contracts.

Since Wolf -- like other governors across the nation -- issued orders that shut down businesses in the pandemic, Fioravante said, it is not the same as if a shutdown was brought about by everyone in the business getting sick.

“The government created this situation, and now they are looking for the insurance companies to bail them out,” Fioravante said.

Bruce Haines, managing partner at Hotel Bethlehem, said his business has been hit hard by the pandemic and he learned via an inquiry that it wasn’t covered by insurance.

“The normal policy just doesn’t cover it,” Haines said. He said he learned that “most policies do not cover a pandemic-type event.”

Democratic state Sen. Judy Schwank, of Berks County, stands firmly behind Iovino’s bill.

Her office, she said, has been inundated with calls and letters from businesses that feel “betrayed” because they had to close while big-box retailers were allowed to stay open.

“Then to top it off they get denied by their insurance carriers,” Schwank said. “And they have done the right thing. These businesses have done everything that we have asked of them, all in the name of public health and safety, and they shouldn’t be further penalized by their insurance carriers because of vague policy language.”

Democratic Sen. Jim Brewster of Allegheny County said he was shocked to hear that so many claims were under dispute.

“This is simple,” Brewster said. “You buy insurance for the unpredictability of what you may face as a small business. If you could predict it, you wouldn’t have it happen. So this is pretty clear.”

Iovino said in an interview that state Sen. Sharif Street, a Philadelphia Democrat, has asked for a hearing on the business interruption-related bills.

Street said “insurance is there to provide a measure of stability” and “relief when things fail.” He said he would work to see that a Senate hearing takes place.

Republicans control the Senate. Any hearing would have to be called by Sen. Mario Scavello of Monroe County, majority chairperson of the Banking & Insurance Committee, where Iovino’s bill awaits action.

Scavello said he was considering whether to hold a hearing.

Morning Call Capitol correspondent Ford Turner can be reached at fturner@mcall.com

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