Harrisburg, PA – August 27, 2020 – Today, State Senators Iovino, Street, Brewster, Schwank, and Hughes joined members of the Commonwealth’s small business community via Zoom to advocate for bipartisan legislation that would help Pennsylvania businesses file claims on their business interruption insurance policies, a potential source of funds that could help prevent businesses from being forced to close their doors. Business interruption insurance is coverage that replaces income lost in the event that business is halted due to a disaster. Since the pandemic and resulting shutdown, many Pennsylvania small businesses have sought financial relief by filing claims on their business interruption insurance policies, only to be denied due to ambiguous insurance policy language.
“To confront the most daunting economic challenge of our time, we need to put in place every available option to provide safety nets and recovery tools to support our businesses and our economy – and that includes business interruption insurance,” said Senator Pam Iovino (D – Allegheny & Washington). “Businesses that have consistently paid their business interruption insurance premiums expect their insurance coverage to provide security during a time of need. They need to know that a lifeline they planned for is available and within reach, and this bipartisan bill would do just that.”
Senator Iovino’s legislation, Senate Bill 1127, is designed to clarify Pennsylvania law and specifically applies to businesses with business interruption coverage that contains a “civil authority” clause. These clauses provide protections when government action, typically taken in response to a natural disaster or similar life-threatening event, prevents the business from operating. The Pennsylvania Supreme Court has characterized the pandemic as a “natural disaster and a catastrophe of massive proportions.” Also, the legislation would clarify that the presence of COVID-19 in a community constitutes “property damage.”
Under this legislation, businesses would not receive additional payment beyond what their existing coverage permits. Insurance companies would not be mandated to immediately pay claims – the normal claims review process would take place before any payments are made.
Senate Bill 1127 was referred to the Senate Banking and Insurance Committee on April 30. The next step in the legislative process would be a Senate hearing.
“The economic damage caused by the pandemic is something our communities have never faced,” said Senator Sharif Street (D – Philadelphia). Small businesses are the foundation of economic ecosystems throughout communities in the Commonwealth, we must do all we can to sustain them. As Democratic Chair of the Banking & Insurance committee I am committed to working with Chairman Scavello (R) to convene a hearing pending growing reports of businesses across communities having their insurance claims denied. This bill will ensure that we protect the small businesses that drive our economy which have been interrupted through no fault of their own. I’m proud to join Senator Iovino, a leader in this bipartisan effort. “
“Businesses that have paid insurance premiums to financially protect themselves when there is an interruption in operations – such as when the coronavirus pandemic struck – shouldn’t have to struggle when a claim is made,” said Senator Jim Brewster (D – Allegheny & Westmoreland). “Entrepreneurs and small business owners rely on insurance to cover these types of situations.
Covering losses from situations beyond the control of businesses is exactly why you buy and pay for insurance. There should be no problems when operations are suspended and claims are filed.”
Lori Poe, who co-owns The Tandem Connection Bike & Running Shop in Washington County with her husband, said “if we were able to get some reimbursement from our insurance company for the business interruptions and loss of our second store, it would help us stay above water in the winter months when we are typically very slow. We appreciate Senator Iovino, her staff, and other legislators going to bat for the small businesses in our area.”
“As President/CEO of the Pittsburgh Airport Area Chamber of Commerce, one of the largest regional chambers in the Commonwealth, I feel compelled to advocate and to support legislation that is specifically designed to add a ‘lifeline’ to our small business community devastated by the pandemic,” said Chris Heck. “Financial relief should not be denied to those due to ambivalent insurance policy language. We support Senate Bill 1127, introduced by our PA Senator, Pam Iovino.”
“There’s no doubt about it – small businesses in Pennsylvania are suffering,” Senator Judy Schwank (D – Berks) said. “These businesses, which have done everything we’ve asked of them, should not be further penalized by their insurance carriers because of vague language.”
Jack Goodrich, a Pittsburgh attorney who specializes in business interruption insurance claims, said that “all we want to do is protect the small business owners that are the backbone of this country. They paid their premiums for years and deserve compensation now for their business losses through no fault of their own.”
“Small businesses all across Pennsylvania are bearing an undue share of the economic collapse caused by the coronavirus pandemic,” said state Senator Vincent Hughes (D – Philadelphia & Montgomery). “Taking action on business interruption insurance is a must. We should be providing every option possible to help their survival and recovery because they are the backbone of our economy.”
A downloadable video of today’s virtual press conference can be accessed here.
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