On April 24, 2020, Representative Elder introduced House Bill No. 5739 in the Michigan Legislature. If passed, it would require business interruption insurance policies then in force to indemnify qualifying businesses, subject to the limits under the policy, for any loss of business or business interruption for the duration of the declared state of emergency due to COVID-19. To qualify under this bill, the insured business would have to have less than 100 eligible employees in Michigan. Eligible employee is defined in the bill as a full-time employee working a normal workweek of 25 or more hours. The bill defines business interruption insurance as coverage against loss or damage to property, including the loss of use and occupancy and business interruption.
Clients frequently ask whether they have business interruption coverage for losses caused by COVID-19. To answer the question, the specific terms of the insurance policy must be analyzed. The proposed bill would alter this by requiring insurers to pay COVID-19 claims for business interruption coverage for qualifying businesses with a business interruption policy in force.
If enacted, this law will likely be challenged by insurance companies as improper alteration of the contracts between them and their policy holders.
Please feel free to contact us with your questions about this proposed bill and about your business interruption insurance policy.
