A pair of Brooklyn lawmakers introduced legislation on April 23 that, if signed into law, would force insurance companies to pay out business interruption claims for revenue losses racked up during the ongoing coronavirus pandemic.
“This is an interruption on business on a very large-scale,” said state Senator Andrew Gounardes, who introduced the bill in the senate. “What good is carrying insurance if the insurance won’t pay a claim?”
Park Slope Assemblyman Robert Carroll — the bill’s sponsor in the assembly — drafted the legislation after hearing that insurance companies were refusing to pay business interruption claims, pointing to virus exclusions written into policies.
Meanwhile, business owners paying hefty insurance premiums have been left to foot the bill at the same time they experience dramatic losses due to outbreak-related shutdowns.
“The insurance industry is sitting on $900 billion in reserves while small businesses who have paid business interruption premiums for years have their claims denied over and over again because the insurance industry claims COVID-19 doesn’t constitute a business interruption,” Carroll said. “This is absurd, greedy, immoral, and factually incorrect.”
Business interruption insurance typically compensates policyholders for loss of income and covers payroll costs during a disastrous event, which could buoy many of the borough’s business owners who were not granted aid in the federal coronavirus package.
“This would be a lifeline,” Gounardes said. “Until the small business loan package actually delivers relief to small business owners, and so far we’ve seen it has been very few, we need to make sure we are turning every stone possible to get small businesses the help that they need.
A survey released by the Brooklyn Chamber of Commerce found a whopping 84 percent of borough’s businesses who applied did not receive funding in the federal Paycheck Protection Program, while larger businesses like Ruth’s Chris Steak House and Eataly are reported to have received millions in federal aid.
If the legislation is passed, business owners will be eligible to collect on business interruption claims if they held a policy on or before March 7 — the day Gov. Andrew Cuomo declared a state of emergency.
The bill has been referred to committee in both the senate and the assembly, though it is unclear when they will be released for a floor vote.