The purpose of business interruption insurance is to indemnify the policyholder in case of a covered loss for the income that would have been earned had no loss occurred, subject to limitations in the coverage forms. Coverage is written on an “actual loss sustained” basis and is often factored in net income plus continuing expenses format.
The legislative activity in New York, Massachusetts, New Jersey and Ohio comes as several employer groups are leaning on state and local governments to help their industries weather a devastating time.
The legislation introduced in the Massachusetts Senate by state Sen. James Eldridge would entitle any business employing fewer than 150 employees to payment under their business interruption policies if COVID-19 was the reason for their closure. The businesses would be compensated for as long as an emergency social distancing decree from Gov. Charlie Baker remains in effect.
A similar bill introduced in the New Jersey Assembly would be effective immediately and entitle covered businesses to disruption payments extended back to March 9. It applies to policyholders with 100 or fewer employees.
The New York legislation also applies only to businesses with 100 or fewer employees.
Many other states are sure to introduce similar legislation as this situation continues to develop.
NARFA, along with many experts in the commercial marketplace are urging businesses to file a Business Interruption Claim with their carriers.
Here is a link to Business Interruption Worksheet