Saturday, 24 July 2021

State insurance commissioner orders insurance data on business interruption coverage to assist small businesses

SACRAMENTO – On Thursday, California Insurance Commissioner Ricardo Lara directed insurance companies to submit data to the California Department of Insurance regarding coverage of commercial business interruption related to COVID-19.

The data will help state policymakers to understand the scope of insured and uninsured losses to businesses in order to help them recover and keep workers employed.

“The coronavirus crisis is devastating small businesses across our state, throwing people out of work and quickly unraveling our economy,” Commissioner Lara said. “Although many small businesses maintain commercial multi-peril insurance policies with business interruption coverage, they will have large uninsured losses. We are currently working with the insurance industry and business groups to find creative solutions during this unprecedented crisis to make sure our businesses survive, and we need this data to define the size of the problem.”

Commissioner Lara called on the insurance industry to assist small businesses facing layoffs and lost income due to business closures and government actions to prevent the spread of COVID-19.

Insurance company responses to the data call are due by April 9, 2020, and will help the Department understand the number and scope of commercial business interruption type coverages in effect and the approximate number of policies that exclude viruses such as COVID-19. This data will help inform state policymakers on solutions to protect businesses.

The department has posted answers to “Frequently Asked Questions” for businesses to help determine whether they have coverage for lost income due to government-ordered closures.

Commercial multi-peril policies may include coverage for business interruption, however, most have exclusions related to virus contamination and similar perils.

Business owners should check their policy for a specific exclusion for viral/bacterial contamination or an incident triggered by an epidemic/pandemic, which means insurance would likely not cover losses related to COVID-19.

The department will continue to work with the governor, State Legislature, and local leaders on creative ways to help address the urgent need of California’s small businesses.

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