Maximizing Insurance Recovery for Losses from the Coronavirus/COVID-19 Pandemic

Massachusetts Proposes Legislation to Require Insurers to Pay Business Interruption and Loss of Use Losses Arising from the COVID-19 Virus

A bill was introduced in the Massachusetts legislature on March 24, 2020 that, if passed, will require property insurers which issue insurance policies in Massachusetts insuring against loss of use or occupancy of property or business interruption losses to pay for business interruption losses arising from the COVID-19 virus.

The bill seeks to require insurers to pay losses arising from loss of use or business interruption due to the COVID-19 pandemic notwithstanding any exclusion in an insurance policy for viruses or language of the policy which may require physical damage to the insured property or other relevant property.  The right to recover losses under an insurance policy would apply to any business with 150 or fewer full-time employees who had an insurance policy in effect as of March 10, 2020 when Massachusetts Governor Charlie Baker issued an emergency declaration or any policy issued after March 10, 2020 and before the governor’s emergency order is rescinded.  The coverage period for such losses continues until the maximum period of business interruption or loss of use coverage under the policy or governor’s emergency order is rescinded, whichever is longer, and requires payments up to the coverage limits under the particular insurance policy.   The bill permits any insurance company providing coverage to an insured who files a claim for loss of use or business interruption coverage under the proposed law to apply to the Massachusetts Insurance Department for reimbursement of payments made to its insured.

You may review the Massachusetts Bill SD 2888 here.  The proposed legislation is similar to legislation proposed in other states, like New Jersey, New York and Ohio, that seeks to protect businesses from financial losses arising from the COVID-19 pandemic.  If the Massachusetts bill becomes law, it will likely provide relief to many restaurants, hotels and other businesses.  Whether the legislation becomes law remains to be seen and may be subject to certain challenges.  Regardless of whether new laws are enacted in various states, all businesses should review their insurance policy portfolio to evaluate the extent of any insurance coverage for losses arising from COVID-19 virus’ unprecedent impact on the global economy.    

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