Co-authored by: Cileena Terra
States across the United States have been proposing legislation that could retroactively remove virus exclusion clauses for COVID-19 business income and civil claims. New Jersey has recently proposed Assembly Bill 3844 which would mandate that “every policy of insurance insuring against loss or damage to property, which includes the loss of use and occupancy and business interruption in force in this state… shall be construed to include among the covered perils under that policy, coverage for business interruption due to global virus transmission or pandemic…” This bill would retroactively void the virus exclusion clause and potentially expand the business income loss, extra expense, and civil authority coverages under commercial policies issued to businesses with less than 100 employees. The New Jersey bill would also provide a recovery fund for those companies, which fund will be paid into by all insurers.
Massachusetts and Ohio are currently following New Jersey’s lead in enacting similar coronavirus insurance legislation. The Massachusetts Senate Bill 2888 specifically states that no insurer may deny a claim for the loss of use and occupancy and business interruption due to COVID-19 even if the insurance policy excludes losses resulting from viruses and even if there is no physical damage to the insured’s property. Similar New Jersey’s proposed legislation, this would apply retroactively to the date of the emergency declaration, March 10, 2020, and would apply to insureds with 150 or fewer full-time employees. The Ohio General Assembly Bill 589 would apply to businesses with 100 or fewer employees and would indemnify the insured for any loss of business interruption due to the virus transmission or pandemic for the duration of the state of emergency.
If passed, these bills would potentially protect business owners from having insurance companies from deny coverage from losses incurred due to COVID-19. We will keep you updated on all COVID-19 related legislation as it progresses.