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Client Alert: New Business Interruption Insurance Bill Filed in Massachusetts

On March 24, 2020, in response to the severe financial impact of the COVID-19 pandemic on hotel, restaurant and retail businesses in the Commonwealth of Massachusetts, Sen. James B. Eldridge, a State Senator from the Middlesex and Worcester district, filed S.D. 2888, a bill entitled “An Act Concerning Business Interruption Insurance.”

If enacted, the bill would provide critically needed revenue to retailers and owners of hotels and restaurants in the Commonwealth of Massachusetts through a mandate that requires insurers who have written insurance policies for business interruption insurance to pay policyholders who have had their businesses interrupted as a result of the COVID-19 pandemic. The bill requires insurers to approve claims for business interruption insurance, notwithstanding (a) any virus exclusions or (b) policy requirements that there also be property damage accompanying the business interruption.

The bill would apply to hotels, restaurants, and other businesses, provided that the bill only covers businesses with 150 or fewer full-time-equivalent employees. It is unclear if such an employee cap is intended to apply on a per-location or on an aggregate employee basis. We expect that such ambiguity will be resolved as the bill moves to committee. If enacted, the mandate for insurers to provide such coverage would cease to be effective when the order issued by Governor Charlie Baker on March 10, 2020, declaring a state of emergency in connection to the COVID-19 pandemic, is rescinded.

The coverage mandated by the bill is subject to the monetary limits in each applicable policy and allows insurers to seek reimbursement for the costs of such newly mandated coverage from the Massachusetts Division of Insurance. To fund such reimbursements, the bill grants the Commissioner of the Division of Insurance authority to make “one or more” assessments against domestic and foreign insurance companies licensed in Massachusetts, provided they sell business interruption insurance. The bill does not specifically proscribe the amounts of such assessments, or when such assessments may commence. Such decisions are left to the Commissioner of the Division of Insurance, although it seems likely that such assessments would not begin until after the COVID-19 crisis is over, and that they would ramp-up over time.

There is much that is not yet known about this bill. However, we wanted to update you on its recent filing.

© 2022 SHERIN AND LODGEN LLPNational Law Review, Volume X, Number 86

About this Author

Joshua Bowman Real Estate Attorney Sherin Lodgen

Joshua M. Bowman is a partner in the firm’s Real Estate and Corporate departments and is chair of the firm’s Hospitality Practice Group.

Described by his clients as “a skilled and tenacious attorney with a collegial demeanor” who provides “a practical approach with deal-focused creativity,” Josh brings years of experience counseling local and national real estate owners and developers, institutional and non-institutional lenders, investors, tenants, contractors, and other businesses in connection with a wide variety of...

Thomas Hippler Real Estate Attorney Sherin Lodgen Law Firm
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Thomas A. Hippler is Of Counsel in the firm’s Real Estate and Business Law departments.

Tom’s practice focuses on representation of retailers and developers in commercial real estate matters, including leasing, acquisition, development, and financing. He also represents companies on corporate matters including compliance, risk management, and governance. Tom returned to the firm after sixteen years leading the U.S. legal function of Koninklijke Ahold N.V., an international food and e-commerce retailer.

Prior to rejoining Sherin and Lodgen, Tom served as Executive Vice...

Carla M. Moynihan Real Estate Attorney Sherin and Lodgen

Carla M. Moynihan is a real estate lawyer with over 20 years of experience representing clients in acquisitions, dispositions, leasing, development and financing.

Carla represents institutions, developers, retailers, individual investors, hospitals, medical professionals, hotels, state agencies, municipalities, and lenders in all aspects of commercial real estate transactions, including negotiating and drafting letters of intent; term sheets for financing; purchase and sale agreements; land disposition agreements; development agreements; building and ground/air rights leases for...

Joseph Wang Hospitality Attorney Sherin Lodgen Law Firm

Joseph Y. Wang is a partner in the firm’s Real Estate Department and member of its Hospitality Practice Group.

He has experience in a variety of real estate matters, including land use, zoning and development, and representing landlords and tenants in office, retail, and research and development leasing matters large and small.

Joseph has been engaged in several large development projects in Boston, where he has negotiated with local and state agencies and private parties to bring brand name hotels and residential stock to the city.

He has participated in the...