Texas Senate Bill SB249

Texas 2021 - 87th Regular

Caption

Relating to business interruption insurance coverage for losses arising from a pandemic.

Impact

The enactment of SB249 is expected to alter the landscape of business interruption insurance significantly. It mandates that insurers cover pandemic-related interruptions, which can have financial implications for both businesses and insurance companies. For businesses, this could provide crucial financial support during unprecedented times, while for insurance providers, it may lead to increased claims and potential re-evaluation of policy terms and premiums. The bill thus aims to offer enhanced security for businesses against future pandemics.

Summary

Senate Bill 249 aims to amend the Insurance Code to require that all business interruption insurance policies in Texas include coverage for losses incurred due to pandemics. This is specifically in response to the challenges faced by businesses during the COVID-19 pandemic, where many policyholders found their claims denied on the basis that there was no direct physical loss to property. The bill asserts that losses caused by pandemic-related civil authority orders should be covered under such insurance policies, thereby expanding the scope of protection for Texas businesses.

Contention

While proponents argue that this bill is a necessary provision to safeguard businesses from unforeseen pandemic-related losses, there are notable concerns regarding the possible burden it could place on insurance companies. Critics fear that the expanded coverage could lead to higher premiums and a more stringent underwriting process. There are also worries about the practicality of enforcing such measures, given that many insurers have historically limited their exposure to pandemic risks in policy terms. This disagreement reflects the broader tension between protecting businesses and managing the risks for insurance providers.