Policymakers are grappling with how best to provide financial support to businesses that are forced to close due to the outbreak or as required by government order. It is increasingly clear to most officials and a growing universe of business owners that business interruption insurance does not provide coverage for these losses, and a wide range of possible legislative responses are being contemplated.
Earlier this week, legislation (HB 589) was introduced in the Ohio House of Representatives that will retroactively require every policy of insurance insuring against loss or damage to property, which includes the loss of use and occupancy and business interruption, in force in Ohio when Ohio’s state of emergency declared under Executive Order 2020-01D took effect on March 9, 2020, to include among the covered perils under that policy, coverage for business interruption due to global virus transmission or pandemic during the state of emergency.
The bill goes on to create a process in which insurers will be assessed by the Ohio Department of Insurance (ODI) and then can apply to ODI for reimbursement for claims paid to insureds. Insurers writing any property and casualty coverage—even those not writing commercial property insurance—will be responsible for funding the reimbursement fund. See a complete analysis of this bill.
We have vetted this legislation with OIA’s Advocacy Committee. OIA’s position is that this issue requires a federal solution, not a state-based solution. We believe that a more commonsense solution can and will be developed at the federal level to address this crisis and provide further relief to businesses. In case you missed it, the Wall Street Journal published an editorial this past weekend on the folly of forcing insurers to cover BI claims related to COVID-19.
We anticipate with the passage of the massive Coronavirus Aid, Relief and Economic Security (CARES) Act last Friday, further Congressional action will take place to provide even more relief, such as a federal mechanism to compensate businesses for business interruption losses and employee indemnity and medical benefits resulting from the outbreak that would not otherwise be covered by workers compensation insurance. While timing is very uncertain for when Congress will be back in session, there is already pressure and conversations on a possible phase four Coronavirus legislative package. With this in mind, we advise you to instruct clients to keep track of their business income losses with this Business Income Loss Information Guide so that they can be prepared when a federal response to address this is unveiled. To this end, we have prepared this sample communication that you can use with your clients.
The CARES Act will provide significant funding to fight coronavirus while also providing immediate relief to individuals and small businesses all over the country.
Included in the vast $2 trillion package is $500 billion for distressed sectors, $377 billion in small business assistance to prevent more workers from losing their jobs and businesses from going under, and $250 billion to expand unemployment benefits to provide individuals and families with money in their pockets.
For more information, our national association, Big “I”, has created a full write up of the bill. Additionally, here is a Small Business Owners Guideto the CARES Act and an FAQ on the Paycheck Protection Program that may help some of your small business clients.
Of critical importance to agents is the $350 billion in small business loans that you and your clients can benefit from. In addition to the loans, the CARES Act would also allow employers to delay the payment of their 2020 payroll taxes until 2021 and 2022, leading to approximately $300 billion of extra cash flow for businesses.
This legislation also includes a provision providing recovery checks directly to most taxpayers, with some limitations based on income. Individuals are eligible for checks up to $1,200 and married couples filing jointly are eligible for checks up to $2,400, with an extra $500 for each child. Eligibility is reduced starting at $75,000 in 2018 income for individuals and $150,000 in 2018 income for joint filers and individuals with 2018 income exceeding $99,000 and joint filers with 2018 income exceeding $198,000 are ineligible.
OIA will communicate more information about the CARES Act that will be of help to you and your clients. We will also keep you apprised of any further developments regarding business interruption.
If you have questions or concerns, please contact Carolyn Mangas at carolyn@ohioinsuranceagents.com.
