Advisen FPN

Advisen Front Page News - Friday, March 27, 2020

Efforts to broaden business interruption cover crop up in Ohio, Mass.


Efforts to broaden business interruption cover crop up in Ohio, Mass.

By Erin Ayers, Advisen

Lawmakers in Ohio and Massachusetts introduced bills that would compel insurers to pay business interruption claims stemming from COVID-19 shutdowns, regardless of whether policies provide coverage.

The measures follow a similar bill (AB-3844) in New Jersey shelved by legislators for further review. It resurfaced briefly to be scheduled for a vote on March 25 but was pulled again.

Each of the bills would hinge upon the declaration of a “states of emergency” by the state governor. The measures would apply to small businesses with fewer than 150 employees in Massachusetts and 100 employees in New Jersey and Ohio. The bills include language requiring insurers to indemnify those companies for business interruption and loss of business experienced during a state of emergency, to the limits of the relevant policies.

Additionally, the measures would create mechanisms to spread losses among all insurers doing businesses in the respective states.

Most legal observers have noted that the bills are unlikely to withstand judicial scrutiny, given the fact that they would interfere with pre-existing, agreed-upon contract language.

Insurers and attorneys have argued that the bills would retroactively add coverage for risks not considered in the underwriting and pricing process. In recent weeks, insurers around the world have faced calls to pay BI claims despite the typical exclusions for pandemics and viral/bacterial contagions in property insurance policies. The New Jersey bill attracted significant attention and prompted the industry to be on the lookout for other similar legislation.

“While all industries want to be partners in ensuring against economic distress during this period, retroactively requiring contractual changes for which no premium was collected is a dangerous, unprecedented, and unconstitutional proposal. The insurance industry will work with stakeholders on prudent solutions to help policyholders during this national emergency, but A-3844 is not the answer,” said Erin Collins, vice president of state affairs for the National Association of Mutual Insurance Companies (NAMIC) on the New Jersey bill. NAMIC member companies – many of them regional mutual insurers – cover many small businesses that would be affected by the legislation.

Editor Erin Ayers can be reached at

St. John's University