Senator Eldridge Files Business Interruption Insurance Legislation

The bill would require insurance companies to cover businesses’ costs if they close down due to the Covid-19 pandemic.

BOSTON, MA - In response to concerns from Massachusetts small business owners, especially restaurants, shutting down due to the Coronavirus pandemic while struggling to pay their bills, State Senator Jamie Eldridge (D-Acton) has filed S.D. 2888, An Act Concerning Business Interruption Insurance.

This bill would require insurers to cover losses arising from business interruptions related to Covid-19, allow insurers to apply for reimbursement for the costs through the Division of Insurance, and allow the Division of Insurance to reimburse licensed insurers that sell business interruption coverage.

“Business owners are in a financial crisis as a result of the Coronavirus pandemic, while facing the requirement to pay rent, various business costs, and employee wages,” said Senator Eldridge. “Many of these businesses purchased business interruption insurance, yet in speaking to their insurance agents, have confirmed that this insurance does not cover virus pandemics.SD2888 will require insurance companies to pay these business claims, while creating a mechanism for the state government to reimburse insurers, and recoup those state funds in the future, after the pandemic is over. If all the stakeholders, including elected officials, are serious about protecting our small businesses and their employees, including restaurants and restaurant workers, during the Covid-19 pandemic, we need to back up our small businesses through insurance reforms, including passing SD2888.”

Many business owners in the restaurant, hotel, and retail sectors purchased business interruption insurance to protect themselves if a catastrophe caused an interruption in their ability to conduct their business. Every year, such business owners pay substantial premiums for this business interruption coverage.

However, now that the COVID-19 crisis has caused many restaurant, hotel and retail business owners to close their doors or substantially curtail their businesses, insurance companies are informing business owners that they will deny claims for business interruption insurance.

“Our restaurants, or any other industry made up of mostly small businesses, is not going to be saved by just carryout or delivery service during the Coronavirus pandemic, it's going to be saved by comprehensive government action,” added Senator Eldridge.

Jose Duarte, owner of Taranta, a popular Peruvian-Italian restaurant in the North End, said, “We will not be able to successfully open up again without enough funds to get us through the time our businesses remain closed or the time it will take for consumer confidence to be restored. Our corporate events won’t be the same for a while and building consumer confidence will take time. If a loss of interruption claim is awarded, it will give us peace of mind and the funds needed to get our business up and running again.”

The Red Raven Restaurant in Acton, Massachusetts is worried that their independent business will suffer permanent damage especially because they were already operating on a very slim profit margin.

“Most independent restaurant owners go to great lengths to keep costs in line and you give your heart and soul to your business 7 days a week,” said Jenifer Apazidis, owner of the Red Raven. “What is happening right now in our country is worse than many natural disasters, where, in most cases loss of product, business interruption would be covered by insurance. The COVID-19 crisis is going to change the landscape of our restaurant industry forever and the effect will be apparent for years to come. Insurance companies must enact a way to protect their businesses under our existing policies so that we in turn can protect our employees and our families.”

Another small business, Gardner Cinemas in Gardner, Massachusetts had to temporarily close down due to the government-ordered shutdowns. The owners were also paying the premium insurance for years in order to have coverage when a crisis occurs.

“Small businesses ability to collect on these policies may very well be the difference between being able to reopen and potential bankruptcy when this is all done,” said Chris Diagle, Vice President and Co-owner of Gardner Cinemas. “There is simply no way for a small business to survive months of having no income and still be able to pay all of the fixed costs that don't go away when business comes to a halt. So many jobs and livelihoods are at stake.”

This bill has not yet been assigned to a committee. Legislators can still cosponsor the bill S.D. 2888: https://malegislature.gov/Bills/191/SD2888

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