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AB-743 Insurance: business interruption: coverage for COVID-19.(2021-2022)

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Date Published: 02/16/2021 09:00 PM
AB743:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 743

Introduced by Assembly Member Ramos

February 16, 2021

An act to add Chapter 12 (commencing with Section 10109) to Part 1 of Division 2 of the Insurance Code, relating to insurance, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


AB 743, as introduced, Ramos. Insurance: business interruption: coverage for COVID-19.
Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and generally regulates the business of insurance in the state. Existing law authorizes the issuance of insurance, which may cover, among other things, business interruption.
Other existing law, the California Emergency Services Act, authorizes the Governor to declare a state of emergency during conditions of disaster or extreme peril to persons or property, including epidemics. Pursuant to this authority, on March 4, 2020, the Governor declared a state of emergency relating to the coronavirus 2019 (COVID-19) pandemic.
This bill, with respect to a policy of insurance that provides coverage for business interruption, would create specified rebuttable presumptions affecting the burden of proof in a case in which the insured alleges that the business interruption was due to the COVID-19 pandemic and occurred during the period of the state of emergency declared by the Governor due to the COVID-19 pandemic. Specifically, the bill would create certain rebuttable presumptions that COVID-19 was present on specified property and caused physical loss or damage to that property which was the direct cause of the business interruption. Among other things, the bill would provide that with respect to coverage for business interruption due to an order of civil authority, a rebuttable presumption applies that COVID-19 was present on property located within the geographical location covered by the order of civil authority and caused physical loss or damage to that property which was the direct cause of the insured’s business. The bill would define “civil authority” for these purposes to include any federal, state, or local government, or the governing body or duly constituted agencies of any federally recognized Indian tribe, and their instrumentalities, divisions, political subdivisions, enterprise boards, and business entities. The bill would prohibit COVID-19 from being construed as a pollutant or contaminant for purposes of any exclusion within an insurance policy unless viruses are expressly included in that exclusion policy language. The bill would provide that it applies retroactively to all insurance policies that provide coverage for business interruption that were in full force and effect on and after March 4, 2020.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Chapter 12 (commencing with Section 10109) is added to Part 1 of Division 2 of the Insurance Code, to read:
CHAPTER  12. Coverage for COVID-19

10109.
 (a) With respect to a policy of insurance that provides coverage for business interruption, the following rebuttable presumptions affecting the burden of proof apply in a case in which the insured alleges that the business interruption was due to the coronavirus 2019 (COVID-19) pandemic and occurred during the period of the state of emergency declared by the Governor due to the COVID-19 pandemic:
(1) With respect to coverage for general business interruption and extra expenses, a rebuttable presumption applies that COVID-19 was present on the insured’s property and caused physical loss or damage to that property which was the direct cause of the business interruption.
(2) With respect to coverage for business interruption due to an order of civil authority, a rebuttable presumption applies that COVID-19 was present on property located within the geographical location covered by the order of civil authority and caused physical loss or damage to that property which was the direct cause of the insured’s business interruption.
(3) With respect to coverage for business interruption due to impairment of ingress and egress, a rebuttable presumption applies that COVID-19 was present on the property of a third party and caused physical loss or damage to that property which was the direct cause that prevented the ingress and egress to the insured’s property and resulted in the insured’s business interruption.
(b) For purposes of this section, “civil authority” includes any federal, state, or local government, or the governing body or duly constituted agencies of any federally recognized Indian tribe, and their instrumentalities, divisions, political subdivisions, enterprise boards, and business entities.
(c) This section does not affect the applicability of any policy provision, including any language addressing loss or damage caused by a virus. However, COVID-19 shall not be construed as a pollutant or contaminant for purposes of any exclusion within an insurance policy unless viruses are expressly included in that exclusion policy language.

10109.1.
 The benefits of this chapter shall be retroactively applied to all insurance policies that provide coverage for business interruption that were in full force and effect on and after March 4, 2020, the date the Governor declared a state of emergency related to the COVID-19 pandemic.

SEC. 2.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to protect the solvency of businesses that were forced to close their doors or limit business due to the coronavirus disease 2019 (COVID-19) pandemic, it is necessary for this act to take effect immediately.