Commissioner Lara requires insurance companies to fairly investigate all business interruption claims caused by COVID-19
News: 2020 Press Release
LOS ANGELES, Calif. — After receiving numerous complaints from businesses, public officials, and other stakeholders of certain insurance representatives attempting to dissuade business policyholders affected by COVID-19 from filing a notice of claim under its business interruption insurance coverage or refusing to open and investigate these claims upon receipt of a notice of claim, Insurance Commissioner Ricardo Lara and the Department of Insurance issued a Notice requiring insurance companies and other Department licensees to comply with their contractual, statutory, regulatory, and other legal obligations and fairly investigate all business interruption claims caused by COVID-19.
“I want to be absolutely clear that insurance companies need to fairly investigate all business interruption claims as they would during any disaster,” said Insurance Commissioner Ricardo Lara. “Policyholders deserve all the services, coverage, and benefits they are due under their policy.”
The Notice and existing California regulations require insurance companies and other licensees to:
- Comply with their contractual, statutory, regulatory, and other legal obligations with all California insurance claims including, but not limited to, business interruption insurance claims, event cancellation claims, and other related claims filed by California businesses.
- Acknowledge the notice of claim immediately, but in no event more than 15 calendar days after receipt of the notice of claim.
- Provide the policyholder with the necessary forms, instructions, and reasonable assistance, including but not limited to, specifying the information the policyholder must provide in connection with the proof of claim and begin any necessary investigation of the claim.
- Accept or deny the claim, in whole or in part, immediately, but in no event more than 40 days after receipt of the proof of claim. The amount of the claim accepted or denied by the insurer must be clearly documented in the claim file unless the claim has been denied in its entirety.
The Department of Insurance strongly encourages businesses to review their policies, including policy exclusions, coverage limits, and applicable deductibles, and contact their insurance companies to determine what their policies cover as each insurance policy is different and the coverage varies.
# # #
- Link to Notice
- Business interruption insurance is an optional coverage that may be purchased as part of a comprehensive multi-peril commercial policy, business owners’ policy, or on a stand-alone basis. Many small and large California businesses purchase business interruption insurance to protect against the loss of income and other losses caused by an interruption to the normal operations of the business.
- Additional information for businesses on COVID-19
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.