In the two days since Colucci Law Group told you about business interruption insurance, and the difficulties of filing claims in the face of policy exclusions for bacterial and viral epidemics, things are already changing. A bill has been presented in New Jersey, which may be a template for change nationwide, if it passes in that state.

The bill, AB-3944, would require insurance companies to pay all coverage for business interruption due to “global virus transmission or pandemic” as stated in New Jersey’s executive interruption due to “global virus transmission or pandemic” as stated in New Jersey’s executive order, even if there is an exclusion in the policy for such pandemic. To protect insurance companies from financial disaster when tens of thousands of companies file claims, the act provides that:

  • The required coverage only applies to polices covering insureds with fewer than 100 employees, i.e. small businesses of the type most seriously damaged by short-term shutdowns; and,
  • An insurer who indemnifies an insured under these claims may apply for relief to the State Commissioner of Banking and Insurance for reimbursement of the claims.

The net result is that after the insurance company pays off the businesses making the claims, the State of New Jersey will reimburse the insurance companies. This helps spread out the cost over time and over more agencies, instead of hammering one company or one agency all at once.

Nothing, yet. The New Jersey bill is still in committee. There are some concerns portions may conflict with the Contracts Clause of the U.S. Constitution. But if those issues can be corrected—and there is no reason to think they cannot be—then the bill could act as a springboard for other states to devise similar bills.

Encourage your local politicians and legislators to start reviewing local statutes and see what can be done. If you know your state assembly and representatives, ask them for help. At Colucci Law Group, we know that small businesses are being hit the hardest by both COVID-19 and by the shutdown. We aren’t doctors so we can’t keep you well. But we can help your business stay healthy during and after this emergency.