Most commercial property insurance policies include insuring
agreements that require direct physical loss or damage to covered
property as the triggering event. Without establishing direct
physical loss or damage, a policyholder traditionally cannot meet
its burden to trigger coverage for the economic loss of business
income as a result of closing its doors. Today, with the spread of
COVID-19 and the ensuing shelter-in-place orders, government
restrictions on "non-essential" businesses, and efforts
at social distancing, insurance companies are facing a demand for
coverage of these losses, regardless of the commonly-understood
interpretation of the physical damage requirement. And, as each day
passes, more state legislatures are taking drastic measures by
introducing bills aimed at forcing insurance companies to provide
coverage for COVID-19 business losses, despite the absence of
physical damage to trigger coverage.
