Senate Bill 5351 - Business Interruption Insurance Claims, State of Washington (2021 Regular Session)

Summary

Senate Bill 5351, State of Washington, 67th Legislature, 2021 Regular Session, by Senators Frockt, Nobles, Cleveland, Das and the other sponsors it lists, read first time 01/26/21 and referred to Committee on Business, Financial Services & Trade. It is an act relating to business interruption insurance claims, amending RCW 48.18.200 and 48.18.520 and declaring an emergency. Section 1 states legislative findings that insurers are broadly denying claims, that courts examining the issue have ruled that the words "loss" and "damage" hold distinct meanings, and that the legislature intends to give policyholders additional time to challenge denials. The bill states that to this extent it applies retroactively to February 29, 2020, and that it takes effect immediately.

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Full text

     S-0595.1

                               SENATE BILL 5351


     State of Washington       67th Legislature        2021 Regular Session

     By Senators Frockt, Nobles, Cleveland, Das, Hasegawa,            Keiser,
     Kuderer, Lovelett, Nguyen, Randall, Salomon, and Wilson, C.

     Read first time 01/26/21.      Referred   to   Committee   on   Business,
     Financial Services & Trade.




1        AN ACT Relating to business interruption        insurance claims;
2    amending RCW 48.18.200 and 48.18.520; creating      new sections; and
3    declaring an emergency.


4    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:


 5       NEW SECTION.    Sec. 1.    The legislature finds that the novel
 6   coronavirus disease COVID-19 has had a devastating impact on small
 7   businesses in the state of Washington, particularly those ordered to
 8   close their doors and cease or limit operations under the state of
 9   emergency that the governor declared on February 29, 2020. Many of
10   those small businesses hold insurance policies that include coverage
11   to replace income lost due to loss of or damage to the business
12   premises or other business property. However, insurers are broadly
13   denying claims under those policies, arguing that "loss" and "damage"
14   are synonymous and that no claims are merited absent a showing of
15   actual physical damages to the premises.
16       The legislature notes that Washington state and federal courts
17   that   recently  examined   this   issue  have   ruled  clearly   and
18   unambiguously that the words "loss" and "damage" hold distinct
19   meanings under Washington law in the context of business interruption
20   insurance policies and should not be interpreted to render one word


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1    or the other superfluous. The legislature intends to codify this
2    interpretation to provide greater clarity.
3        The legislature also finds that a significant amount of
4    inaccurate information continues to circulate regarding claims for
5    business interruption insurance coverage, which, coupled with the
6    ongoing effects of the pandemic, may cause some policyholders to fail
7    to timely pursue valid claims. For this reason, the legislature
8    intends to give policyholders additional time to challenge the denial
9    of business interruption insurance claims.

10       Sec. 2.   RCW 48.18.200 and 2019 c 427 s 29 are each amended to
11   read as follows:
12       (1) Except as provided by subsection (3) of this section, no
13   insurance contract delivered or issued for delivery in this state and
14   covering subjects located, resident, or to be performed in this
15   state, shall contain any condition, stipulation, or agreement
16       (a) requiring it to be construed according to the laws of any
17   other state or country except as necessary to meet the requirements
18   of the motor vehicle financial responsibility laws of such other
19   state or country; or
20       (b) depriving the courts of this state of the jurisdiction of
21   action against the insurer; or
22       (c) limiting right of action against the insurer to a period of
23   less than ((one year)) two years from the time when the cause of
24   action accrues in connection with all insurances other than property
25   and marine and transportation insurances. In contracts of property
26   insurance, or of marine and transportation insurance, such limitation
27   shall not be to a period of less than ((one year)) two years from the
28   date of the loss.
29       (2) Any such condition, stipulation, or agreement in violation of
30   this section shall be void, but such voiding shall not affect the
31   validity of the other provisions of the contract.
32       (3) For purposes of out-of-network payment disputes between a
33   health carrier and health care provider covered under the provisions
34   of chapter 48.49 RCW, the arbitration provisions of chapter 48.49 RCW
35   apply.


36       Sec. 3. RCW 48.18.520 and 1947 c 79 s .18.52 are each amended to
37   read as follows:


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1        (1) Every insurance contract shall be construed according to the
2    entirety of its terms and conditions as set forth in the policy, and
3    as amplified, extended, or modified by any rider, endorsement, or
4    application attached to and made a part of the policy.
5        (2) Every property insurance policy containing a grant of
6    coverage for direct physical loss of or damage to property shall be
7    construed to include the deprivation of such property and the loss of
8    the ability to use such property.


 9       NEW SECTION. Sec. 4. This act applies to all causes of action
10   commenced on or after the effective date of this section, regardless
11   of when the cause of action arose. To this extent, this act applies
12   retroactively to February 29, 2020, when Governor Jay Inslee issued
13   Proclamation 20-05, proclaiming a state of emergency for all counties
14   throughout the state of Washington as a result of the COVID-19
15   outbreak in the United States. In all other respects this act applies
16   prospectively.


17       NEW SECTION.   Sec. 5.  This act is necessary for the immediate
18   preservation of the public peace, health, or safety, or support of
19   the state government and its existing public institutions, and takes
20   effect immediately.

                                  --- END ---




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