What Has the California Department of Insurance Done to Address Business Interruption Insurance and COVID-19?

Across the nation, small businesses have been devastated as a result of the shelter-in-place and social distancing measures enacted in response to the ongoing COVID-19 pandemic. Consumer behavior has dramatically changed, even stopping almost entirely for some industries, as the public not only copes with quarantine orders but massive waves of unemployment.

Business owners have looked to their business interruption insurance to get them through these difficult times. However, insurance companies have actively searched for policy loopholes to deny coverage. As a California business owner that has been drastically affected by the pandemic, it is your right and duty to hire an experienced coronavirus business interruption insurance lawyer at Reyes Law to help you recover your lost business revenue and determine what the state is doing to protect your business continuity.

Addressing Business Interruption Insurance in California

California’s insurance commissioner issued a notice to the issuers of commercial insurance policies outlining the requirement to conduct thorough, fair investigations into business interruption claims that resulted from the novel coronavirus pandemic. The notice also required insurers to fulfill the obligations below as well:

  • All insurers must fully comply with their statutory, contractual, and regulatory requirements concerning business interruption claims.
  • Insurers must acknowledge the receipt of business interruption claims within 15 days.
  • Business owners or other relevant parties must be provided with the necessary instructions and forms that will guide them in filing notices of claims. These forms must also facilitate investigations.
  • Insurers are required to accept or deny claims using clear, thorough documentation of the amount to be distributed within 40 days of receipt of the proof of a claim.

If a business interruption insurance provider is provided with a claim for assistance in relation to COVID-19 and fails to comply with the requirements listed above, they will be subject to regulatory actions and private lawsuits. Lawsuits may be made in response to bad faith denial of coverage, specifically.

What to Know About Your Business Interruption Policy in Relation to COVID-19

In order to make a successful claim, you must review the details of your policy. Unfortunately, many insurers are in the right when they deny claims of assistance in relation to the coronavirus, as it is common for policies to exclude viral and bacterial disease epidemics or pandemics. Further, claims for business interruption insurance must be made in regard to damages or halts in business operations that resulted directly from the pandemic itself. (This means that your property was somehow damaged as a direct result of the coronavirus, consequentially disallowing you to continue business as usual.)

However, there are cases in which you may still qualify for assistance, as some policies include government orders and restrictions as eligible causes for the triggering of business interruption insurance coverage. Insurance policies are full of caveats to the coverage they offer, so you must review the details of your policy to be sure of how to move forward with your claim. The state of California has enacted the above guidelines to ensure your case is fairly and thoroughly considered and that the reasoning for acceptance or denial is made as clear as possible in all instances.