CLM National: May 2020

News and verdicts from that affect you from across the country

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COVID-19 drives alerts, legislation, and bulletins in several states around the country, including a bill in Ohio to expand business interruption coverage, a request for COVID-19-related information in Washington, and bulletins in Alabama asking insurers to provide premium relief to, and continue coverage for, consumers.

Washington

Commissioner Requires COVID-19 Information From Insurers

By order on March 25, the Office of the Insurance Commissioner (OIC) required authorized insurance companies to provide certain information regarding the commercial property insurance written in the state. First, the OIC required that each insurer state the volume of business interruption coverage, civil authority coverage, contingent business interruption coverage, and supply chain coverage that was in effect on March 15, 2020. Second, the OIC required insurers to explain the coverage with respect to COVID-19 to policyholders. The explanation was required to include, for example, the type of commercial property insurance held by the insured; whether the policy provides “business interruption” or “business income” coverage; the “covered perils” under the policy; whether the policy provides “civil authority” coverage; whether the policy provides “contingent business interruption” coverage; and whether the policy provides “supply chain” coverage. Responses were due on April 1.—From CLM Member Geoff Bedell

California

Business Interruption Obligations Reiterated

The Department of Insurance issued a reminder that all business interruption claims stemming from COVID-19 losses must be fairly submitted by all agents and brokers and properly investigated by all carriers. The reminder comes after the department received complaints from businesses, public officials, and insureds. Under California law, agents and brokers should not dissuade policyholders from making business interruption claims. Further, they must accept and transmit communications providing notice of such losses to the policyholder’s insurance carrier(s). Once a carrier is on notice of a business interruption claim stemming from COVID-19, the carrier must comply with the established statutory framework. This includes an obligation that all carriers conduct a diligent, thorough, fair, and objective investigation into the claim. If it is determined that a denial of a first-party business interruption claim is appropriate, then California law requires the carrier to not only identify the specific basis for the denial, but also include an explanation.—From CLM Member Tracy M. Lewis

Alabama

Bulletins Call for Premium Reductions, Coverage Flexibility

Insurance Commissioner Jim Ridling issued a pair of bulletins in April designed to provide relief to insurance consumers. Bulletin No. 2020-06 concerns the return of auto insurance premiums due to COVID-19. Ridling urges insurers to offer immediate reductions in premiums to reflect reduced exposure due to shelter-in-place orders. To facilitate this, Ridling says the SERFF filing fee will be waived, and premium reductions or retroactive returns of premium will not be considered rebates or unfair discrimination if they are “reasonably and consistently applied.” Bulletin No. 2020-07 concerns health insurance flexibility, suggesting insurers continue to cover employees whose hours-per-week are reduced, and regardless of any “actively at work” eligibility requirements. Ridling says enforcement actions with respect to filed forms and rates will not be taken against insurers that adjust policies, practices, and notice periods to provide this flexibility.—From Managing Editor Phil Gusman

Ohio

Bill Retroactively Expands Business Interruption Policies

On March 24, state representatives Jeffrey A. Crossman (D) and John M. Rogers (D) introduced House Bill 589, which would retroactively mandate that certain business interruption policies include COVID-19 as a covered cause of loss. The representatives explained that the proposal is an attempt to put a safety net in place for the state’s business community, which is largely comprised of small businesses. If enacted, the bill will apply retroactively to business interruption policies purchased by businesses with fewer than 100 full-time employees, provided coverage was obtained by the time Gov. Mike DeWine issued his March 9 emergency declaration. Notably, the proposed law would implicitly override common ISO terms contained in many business interruption policies, including the virus exclusion adopted following the SARS outbreak. If passed, insurers will undoubtedly challenge the law on grounds that it violates the contracts clause of the Constitution, which limits a state’s ability to interfere with private contracts.—From Northeast Ohio Chapter President Michael C. Brink

Pennsylvania

Supreme Court Rules On Asbestos Apportionment

On Feb. 19, the Supreme Court of Pennsylvania issued a long-awaited decision in Roverano v. John Crane, addressing the issues of a jury’s apportionment of liability on a percentage basis in strict liability asbestos cases and the inclusion of bankrupt entities on the verdict sheet. The court held that liability shall be apportioned equally among strictly liable tortfeasors in asbestos litigation under the Fair Share Act, which permits the inclusion of bankrupt entities on verdict sheets in asbestos litigation, assuming appropriate request and proofs are made during trial. The court’s decision changes how asbestos litigation in Pennsylvania operates, and the effects will be significant for both plaintiffs and the defense. Since the passage of the Fair Share Act, all defendants in asbestos litigation in Pennsylvania have focused on their apportioned liability. This decision now protects a defendant that should bear most of the liability at the expense of the minimally identified defendant, whose mention barely satisfies the prima facie proof requirements.—From Goldberg Segalla’s Gregory McNamee, Erin Miter Scanlon, Joseph Cagnoli Jr., and Joseph Welter

New Jersey

Legislation Temporarily Allows Remote Notarizations

New Jersey joined several other states in temporarily allowing remote notarizations during the COVID-19 outbreak. On April 14, Gov. Phil Murphy signed legislation (A-3903/S-2336) temporarily allowing notaries to conduct remote notarizations using “communication technology.” The legislation took effect immediately, and expires upon the rescission of Murphy’s March 9 state-of-emergency executive order. The remote notarizations must comply with several requirements, such as the notary having personal knowledge of the identity of the remote individual and satisfactory evidence of that identity. The law will make it easier for business to be conducted remotely during the virus outbreak. Attorneys and notaries should fully educate themselves about the law’s requirements and any regulations adopted by the New Jersey State Treasurer before performing remote notarizations or entering into transactions involving remote notarizations.—From CLM Members Sam John and Kelly Waters

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About The Authors
Phil Gusman

Phil Gusman is managing editor of CLM magazine, a publication of the CLM. He can be reached at phil.gusman@theclm.org.

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