An update on the pending Business Interruption Bill in Massachusetts
In an April 14, 2020 article, Agency Checklists asked the question, “Will Insurers Be Required To Pay COVID-19 Business Interruption Claims?”
The article resulted from a piece of legislation sponsored by thirty-nine Massachusetts legislators. This proposed legislation, like legislation filed in Louisiana, New Jersey, New York, Ohio, and Pennsylvania, would have mandated the payment of business interruption insurance claims under existing property policies.
Law would have negated terms of existing commercial property policies
The proposed law sought to negate for commercial property policies issued to insureds with one-hundred and fifty or fewer full-time Massachusetts employees the standard coverage requirement that business interruption claims result from “direct physical damage or loss” or that the policy had a virus exclusion.
The proposed law sought to require property insurers to pay business interruption insurance claims arising during the Governor’s March 10, 2020 Executive Order of [a] “Declaration of a State of Emergency to Respond to COVID-19.” The law, if passed would have stated: “[N]o insurer in the commonwealth may deny a claim for the loss of use and occupancy and business interruption on account of:
- (i) COVID-19 being a virus (even if the relevant insurance policy excludes losses resulting from viruses); or
- (ii) there being no physical damage to the property of the insured or to any other relevant property.
Legislature’s Financial Services Committee reports bill out as “Ought not to Pass.”
The answer to Agency Checklists’ question about whether this bill would require insurers to pay covid-19 business interruption claims, is now clearly, “No.”
The proposed Senate bill, while heavily supported by the restaurant industry, engendered fierce opposition from the insurance industry at hearings held in May 2020 before the Legislature’s Financial Services Committee.
On the Tuesday before Thanksgiving, the Financial Services Committee reported the bill out of committee with the designation “Ought NOT to pass (under Joint Rule 10) and placed in the Orders of the Day for the next session.”
This committee action effectively killed the bill’s possibilities for enactment as a law.
