It reads like a classic David vs Goliath Story but it has real world implications, right here on Cape Cod. At issue: many small businesses are struggling to survive because of the ongoing global health crisis, while insurance companies sit on an $800 billion surplus refusing to pay out on business interruption insurance claims.
CONTEXT
When the realities of the pandemic hit Massachusetts in March 2020, the governor ordered people to stay home and businesses to close temporarily. Many businesses were not able to re-open their doors for three or more months, and those in many sectors have had to continue to operate under strict guidelines and reduced capacities.
The impact of these decisions have been felt across the country with many businesses closing their doors. By the end of 2020,the restaurant industry alone had seen more than 110,000 establishments closed across the country with 3,600 reported in Massachusetts. These closures have meant hundreds of thousands of lost jobs in this state and a sharp decline in business for local suppliers like oyster farmers and bakeries, along with service providers like accountants and marketing consultants.
BREAKDOWN
At a time when so many small businesses in Massachusetts and on Cape Cod have had their business operations interrupted in some way, insurers have been strictly denying all claims under business interruption coverage saying the current situation doesn’t fit the insuring agreement; that pandemics are not covered.
However, one argument presented by policyholders is that it was not the pandemic that forced their closure – state orders did, triggering additional coverage under most policies called “civil authority action” which is covered by most business interruption insurance policies.
Claims with this additional civil authority action coverage are still being denied or small businesses are being told not to even bother pursuing them, while it would only tak ehalf of their surplus to honor such claims.
POLICY SOLUTION
State Senator Diana DiZoglio (First Essex) and State Representative Dylan Fernandes (Barnstable, Dukes and Nantucket) filed legislation in both the Senate and the House last week that would provide another much-needed lifeline to small businesses struggling to make it through the COVID-19 pandemic. Both HD 3170 and SD 1845 would require insurance companies to honor legitimate claims around business interruption insurance.
“The pandemic has shuttered more than a third of small businesses across the state, devastating our local communities. These businesses pay for business interruption insurance every year, but insurance companies have refused to cover losses related to the pandemic,” said Representative Dylan Fernandes. “Small businesses are experiencing unprecedented pain while the insurance companies that are supposed to help them are making a profit and sitting on a pile of cash. This legislation works to ensure that insurance companies do their job and provide support to our local small businesses during a time of great need.”
GET INVOLVED
Small business owners: Love Live Local has joined other advocacy organizations like THIRST (The Hospitality Industry Reimagined Security Trust) and legislators like Senator DiZoglio and Rep, Fernandes in calling on insurance companies denying business interruption claims to meet their responsibilities. Sign on to show your support for and get updates about this measure along with others meant to support our small business community.
Small business lovers: sign up to get legislative updates and calls to action or send a letter to your state senator and representative letting them know you support the passage of this legislation, and reply to this email if you would like to receive issue alerts from us on this topic in the future. To learn about other policy measures that address the financial challenges local businesses are facing and for contact information for the Cape delegation, click here.
