Crow Hosts Forum Examining the Issues Facing Small Business Insurance Policyholders Related to COVID-19

Summary

House Small Business Subcommittee on Innovation and Workforce Development news release dated May 21, 2020, on a virtual forum led by Chairman Jason Crow about small businesses making business interruption insurance claims related to COVID-19. It quotes witnesses including Chris Morrow of Northshire Bookstore, who puts the sales loss across two stores since the closure at north of $538,000, and Francisco Schlotterbeck of Maya Cinemas, who says claims under business income, civil authority, and ingress and egress coverage were denied. It also quotes Mark Shaker of Stanley Marketplace and John W. Houghtaling, II, a Managing Partner at Gauthier Murphy & Houghtaling LLC.

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Crow Hosts Forum Examining the Issues Facing Small Business Insurance Policyholders Related to COVID-19

May 21, 2020

Today, the House Small Business Subcommittee on Innovation and Workforce Development, under Chairman Jason Crow (D-CO), held a virtual forum focused on the issues facing small businesses trying to make business interruption insurance claims related to COVID-19.

“At a time when millions of small businesses are struggling to stay afloat, the unemployment rate is at levels not seen since the depression, and our health care workers are on the front lines battling the spread of this virus, we must all do our part to fight this health and economic crisis,” said Chairman Crow. “Therefore, it is incumbent upon Congress, and especially this Committee, to work with affected policyholders and interested stakeholders to chart the appropriate path forward. The alternative, where small businesses do not get any relief, resulting in permanent business closures and job losses, is unacceptable.”

As stay at home orders cripple the revenues of many small businesses, firms across the country have turned to their business interruption policies as a potential avenue for relief. However, these claims have largely been rejected due to the fact that most policies don’t explicitly cover viral pandemics. The hearing allowed members to hear from impacted policyholders and examine legislative solutions.

“Between my two stores, my sales loss since the closure has been north of $538,000,” said Chris Morrow, Owner of Northshire Bookstore in Manchester Center, VT & Saratoga Springs, NY. “For a small family business that is impossible to overcome without help. It sure would have been nice if my business interruption policies covered my business interruption.”

“Prior to the COVID crisis, we had purchased three policies that could provide coverage to us in the event of any cessation of our business operation of the kind we are currently experiencing,” said Mr. Francisco Schlotterbeck, CEO of Maya Cinemas in Pasadena, CA. “Specifically we purchased business income coverage, civil authority coverage, and ingress and egress coverage. Our policy was paid in full when the pandemic started, and we have continued to pay our necessary premiums, despite not receiving a single payout. But claims under all three of our policies were denied by our insurer.”

“We’re searching and trying to find ways to get through this,” said Mark Shaker, owner of Stanley Marketplace in Aurora, CO. “It’s disappointing that all of our claims have been denied, this is exactly why we made all of our businesses take this kind of coverage, for things that are unforeseen as we mitigate our risk.”

“If you are an American worker, chances are you work for a business that has taken out some of its profit every year and paid it to an insurance company for payroll expenses during a civil authority shutdown,” said John W. Houghtaling, II, Managing Partner Gauthier Murphy & Houghtaling LLC. “American business expected protection on the eve of these shutdowns. For many of them, there was no exclusion for pandemic or viruses. The proverbial lifeboat was paid for, and yet when American business made claims on these policies, they have been uniformly denied regardless of the property language.”

Full video from the forum can be found here.

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