With numerous insurance carriers indicating they won’t pay claims for business income lost during the coronavirus pandemic – including rental income on commercial spaces in co-ops and condos – two state lawmakers from Brooklyn have introduced legislation that would force insurers to pay such claims, the Brooklyn Paper reports.
Many such policies, known as business interruption insurance, carry exclusions for claims related to viruses or bacteria, or if there was no physical damage to the property, such as a fire, that led to lost income.
If signed into law, the new bill 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,” state Senator Andrew Gounardes, who introduced the bill in the Senate, says of the crippling financial fallout of the pandemic. “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 the aforementioned virus exclusions written into many policies.
“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 says. “This is absurd, greedy, immoral and factually incorrect.”
If the bill becomes law, it will be especially significant to co-ops and condos because they have so far been deemed ineligible for the Small Business Administration’s Paycheck Protection Program. That program, which has been snared in bureaucratic snafus and inequities, is intended to help small businesses keep workers on payroll through forgivable federal loans.
A survey released by the Brooklyn Chamber of Commerce found a whopping 84% of the borough’s businesses who applied did not receive funding in the Paycheck Protection Program, while larger businesses like Ruth’s Chris Steak House and Eataly are reported to have received millions in federal aid.
The Brooklyn lawmakers’ bill on business interruption insurance has been referred to committee in both the Senate and the Assembly.
Engage, enrage, ask questions and give answers with your community of board members. Submit your questions and comments here!
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.
A free digital resource for co-op/condo board directors. Published twice a month. Read now on all digital devices.